ASX pushes back commencement date for DLT-based system replacing CHESS

Maria Nikolova

The Exchange has decided to push back the earliest commencement date for the new system from Q4 2020 to target March-April 2021.

As FinanceFeeds has earlier reported, ASX has been working to replace the Clearing House Electronic Subregister System (CHESS) with a new system based on Digital Asset’s (DA) distributed ledger technology (DLT). Today, ASX published a paper on the new system rollout, summarizing the feedback it received during its latest consultation on the matter and announcing a new, revised timetable for the release.

ASX has been working since January 2016 with its technology partner Digital Asset to examine and test the ability of a DLT-based system to underpin the replacement of CHESS. This process led to the decision in December 2017 to proceed with a DLT-based solution.

In April this year, ASX released a consultation paper, CHESS Replacement: New Scope and Implementation Plan. A total of 41 written submissions were received.

Whereas there was continued widespread support for delivering new scope on Day 1, respondents questioned whether the proposed implementation window of Q4 2020 to Q1 2021 was achievable when considering the significance of the technology change and the range of new scope being introduced. ASX considered this feedback and has modified the plan.

As a result, ASX will:

  • defer implementation of seven new scope items from Day 1 to post-Day 1 and bring forward one new requirement in response to strong representations from a number of respondents;
  • push back the earliest commencement date for the new system from Q4 2020 to target March-April 2021;
  • provide an additional six months for user development and testing;
  • defer commencement of industry-wide testing by six months; and extend mandatory accreditation by six months.

The Exchange notes the strong interest in exploring and understanding different connectivity options. Access to DLT-nodes is being prioritised for existing clearing and settlement participants (and their CHESS accredited vendors). ASX says its priority is to ensure that participants’ connectivity requirements to ASX’s critical infrastructure for the delivery of clearing, settlement and other post-trade services are satisfied in the lead up and transition to the new system. When clearing and settlement participants are sufficiently progressed with their chosen access method (node or non-node) to the new system, ASX will engage with other users who wish to explore the provision of other services by using a DLT-node.

ASX will augment its existing plan to:

  •  provide additional information and certainty on aspects of the new system, the different connectivity options and the net benefits associated with each;
  • conduct a series of webinars in September and October 2018 to give an architectural overview of the technical solution and further details around the different connectivity options to respond to some of the most common questions;
  • provide technical account management and day-to-day support for users to assist with their build and test activities;
  • conduct training, through ASX’s technology partner, Digital Asset, on the Digital Asset Modelling Language Software Development Kit (DAML SDK) for participants and their technology vendors;
  •  target the provision of a connectivity pricing framework (that will apply post go-live) prior to the commencement of testing for the managed node service offering;
  • and  provide a transition path to allow participants maximum flexibility with respect to integration.

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