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Central Bank Australia: ASX replace CHESS


RBA, the Central Bank of Australia requires the largest stock exchange in the country. Specifically: “ASX, replace CHESS, without further delay.”

In a statement Thursday, the RBA jointly with the Australian Securities and Investments Commission (ASIC). Above all, they indicated to the Australian Stock Exchange (ASX), that it should replace their old Clearing House Electronic Registration System (CHESS). Specifically, in a compelling but successful way.

This comes days after ASX told shareholders that it was once again delaying the launch of its trading system. Without a doubt, based on Blockchain.

Australian Central Bank calls for ASX to replace CHESS

The Clearing House Electronic Registry System (CHESS). Indeed, it is a critical clearing and settlement (CS) system for Australia’s cash stock market.

It also contributes to investor confidence, the reduction of systemic risk and the stability of the Australian financial system.

It should be said that originally ASX planned to launch the new system, in the first quarter of 2020. Obviously, this was delayed until August 2021. But, it did not happen either.

ASX is supposed to launch the project now, in April 2022. One year ahead of schedule in its most recent schedule.

Importantly, several reasons for the change were cited, including:

  • The current pandemic.
  • Adaptation to changes, requested by stakeholders.
  • Increased development opportunities.

Clients drove deferral

In fact, the ASX has been working on the replacement of CHESS for the last four years. As a consequence, it has become a subject of much debate.

The CHESS calendar had been under review since March. Basically when ASX announced that it would consult in June on the deployment, due to the pandemic.

As if that weren’t enough, the users of the CHEES system pushed hard to delay the launch of the ASX Blockchain system. And some said the change “lacked clarity.”

In addition, Computershare, one of Australia’s leading share registry companies, lobbied ASX. Asking for a delay of two years.

In such a way that, the company declared that it had not been given critical information about the operation of the Blockchain system. Nor about any difference in the rates that may be required for the services.

Equally important, Tony Cunningham, founder of CPS Capital, a Western Australian stockbroker, also suggested that a delay might be appropriate. Mainly to better clarify how distributed ledger technology (DLT) would work in ASX.

For his part, Dominic Stevens, CEO of ASX, stated: “The company is investigating how much longer the schedule should be extended. To meet the demand for significant additional capacity and functionality”.

In closing, ASX Deputy CEO Peter Hiom said:

“ASX remains fully committed to replacing CHESS.”

The truth is that the new implementation schedule will be announced in the second half of October. Do you think that the Central Bank of Australia has to demand again, the development of the system?

I retire with this phrase from Theophrastus: “Time is the most valuable thing a person can spend”.

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