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Based on the information available as of May 1, 2025, here’s a summary of the situation regarding ASX clearing and settlement delays:
Recent Settlement Delays:
* April 2025: The Australian Securities Exchange (ASX) experienced settlement delays in early April 2025 due to a surge in trading volume triggered by market volatility related to newly imposed tariffs. The delays affected the settlement of trades by approximately half an hour.
* December 2024: A significant “batch settlement failure” occurred in December 2024 due to an issue with the current CHESS system’s memory allocation logic. This resulted in the rescheduling of settlement obligations to the next business day.
Regulatory Scrutiny:
* The Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) have expressed serious concerns regarding the management of operational risk at the ASX following the December 2024 incident.
* The RBA conducted an out-of-cycle assessment of ASX Clear and ASX Settlement against its Financial Stability Standard for Operational Risk and downgraded their compliance to “not observed.”
* Regulators highlighted concerns about the speed and nature of ASX’s remediation actions and the adequacy of resourcing and contingency arrangements for the current CHESS system.
* The RBA has recommended that ASX outline plans for implementing contingency arrangements for the current CHESS by April 30, 2025, to ensure settlement can be completed by the end of the day in case of failures.
CHESS Replacement Project:
* The ASX has been engaged in a long and troubled project to replace its aging CHESS (Clearing House Electronic Sub-register System) with a new, initially blockchain-based, system.
* The original blockchain-based replacement project, which was slated to go live as early as 2021, was eventually abandoned in late 2022 after significant delays and escalating costs.
* In 2023, the ASX appointed Tata Consulting Services to deliver a new CHESS replacement.
* The delivery of the clearing services component of the replacement is planned for between March and April 2026, with industry testing commencing in late March 2025.
* ASIC has accused ASX of false and misleading conduct regarding the progress of the initial CHESS replacement project between 2017 and 2022.
* The current CHESS system continues to be the operational system for clearing and settlement.
In conclusion, the ASX has experienced recent settlement delays, which have drawn significant scrutiny from regulators regarding the operational reliability of the current CHESS system. While a replacement project is underway, it has faced considerable challenges and is still some time away from full implementation. The focus is currently on ensuring the stability and resilience of the existing CHESS system in the interim.

Video courtesy of Eurex

Video courtesy of Eurex