ASX announced two consultations to decide the scope and implementation for replacement of its settlement system CHESS, one of which proposes the CHESS replacement settlement and subregister services be implemented in 2029.
The paper is the second of two consultations undertaken by ASX this year to gather industry feedback on scope and implementation for the project to replace Australia’s cash equities clearing and settlement system (CHESS).
ASX also published its summary of feedback received on the industry whitepaper it released in April that sought input on a potential move to shorten the settlement cycle from T+2 to T+1. Taken together, these papers underscore the ongoing stakeholder engagement ASX has been undertaking to ensure it continues to work closely with industry on the delivery of CHESS replacement.
ASX Group executive for Securities & Payments, Clive Triance, said in a statement: “Our commitment to transparent and collaborative consultation is central to the success of the CHESS replacement project as well as Australia’s approach to T+1. “The proposal to implement CHESS replacement across two main releases reflects how we’ve listened to industry feedback. The staged approach to implementation, where we are delivering the clearing services first in Release 1, followed by delivery of settlement, subregister and additional clearing enhancements in Release 2 is designed to manage several factors, including materially reducing delivery risk and allowing for industry readiness.”
Industry driven improvements outlined in the consultation paper include items such as continuous netting, account segregation and corporate action elections. Responses to the industry whitepaper on T+1 settlement were also a key input into the consultation paper, helping inform the proposed sequencing of CHESS replacement implementation stages and the potential move to T+1.
“The majority of responses from industry suggest a clear preference to avoid implementing T+1 at the same time as Release 2 of CHESS replacement,” Triance said in a statement. “In light of the feedback received to the industry whitepaper and having regard to the experiences of transitioning to T+1 in other markets we have presented a number of options on timing to transition to T+1 in Australia, and outlined the risks and benefits of each of the options.”
If a decision is made to move to T+1, the paper recommends the option where that would take place at an appropriate time after the implementation of CHESS replacement.