ASIC investigates ASX's core replacement

The Australian Securities and Investments Commission (ASIC) has commenced an investigation into the Australian Securities Exchange's failed blockchain-based CHESS (Clearing House Electronic Subregister System) replacement project.

The Australian regulator said it informed ASX of the investigation, and would look into “suspected contraventions of the ASIC Act 2001 and the Corporations Act 2001 in relation to the CHESS replacement program.”

The investigation stems from ASX’s abandonment of the blockchain-based replacement of its CHESS core system in November 2022, owing to project management, technical, and scalability issues.

CHESS was ditched in spite of the finance industry's considerable investment in time and money supporting it.

While the ASX still intends to replace the system, it's gone back to square one, this time with the Reserve Bank of Australia keeping close watch.

ASIC's investigation takes in the ASX, ASX Clear, and ASX Settlement entities.

It will also look into whether ASX “directors and officers have breached obligations ... in relation to oversight of the program, and statements and disclosures made by or on behalf of ASX as to the status of the program”.

The ASX said it “takes its obligations very seriously and will cooperate fully with ASIC.”

ASX has since committed to “lift transparency” surrounding its CHESS replacement to rebuild stakeholder trust, and more recently re-established its CIO role, though CHESS delivery responsibility will stay under the guidance of technology transformation project director Tim Whiteley.