ASX faces more questions after Austraclear glitch amid anger over CHESS failure

Financial market figures have questioned whether the Australian Securities Exchange is living up to its licence after repeated technological failures.

The ASX has faced another technical hiccup, after its Austraclear platform faced issues early on Thursday. Picture: NCA NewsWire / Gaye Gerard

Financial market figures have questioned whether the Australian Securities Exchange is living up to its licence, as a hiccup on its Austraclear platform underscored ongoing technological issues at the bourse.

Early on Thursday the ASX revealed Austraclear had delays in issuing business reports, with the issue not resolved for almost an hour and a half.

Austraclear, the ASX’s platform for settling cash and debt transactions in the country’s wholesale markets, serves more than 1000 participants and holds more than $3 trillion in securities.

The upset came in the wake of a major outage on the ASX’s clearing and settlement platform CHESS on Friday, December 20, in which the market operator was unable to settle more than $3bn in trades made on the exchange on the Wednesday two days prior.

This problem, which took the ASX until Sunday to resolve, was the worst outage of CHESS since the system collapsed in November 2020, which forced the market operator to suspend trading and scramble to respond.

The ASX is now preparing a report on the latest outage for its co-regulators: the Reserve Bank of Australia and the Australian Securities and Investments Commission.

But FinClear boss David Ferrall said the repeated issues around CHESS and the ASX’s systems highlighted an open question about the market operator and if it was in breach of its license conditions.

“It’s a point of interest whether ASIC or the RBA take a hard line on this,” he said.

Mr Ferrall said he was concerned about the ASX’s response to the latest outage. Although there had been “very good engagement at an operational level” between FinClear and the ASX, it was not the case higher up.

FinClear CEO David Ferrall.

“Maybe this means the executives have said FinClear are good and we’re talking to them at an operational level but in fact I have not been given any direct explanation of what went wrong,” he said.

Mr Ferrall said it was curious executives at the ASX had not reached out to him.

“From a customer service perspective, I find that pretty disappointing,” he said.

The ASX attempted to mollify brokers, pledging to waive levies charged on late settlements.

But several market figures have told The Australian anger remains in the sector, with several brokers and operators caught out by being forced to borrow over the weekend outage to ensure clients were paid.

ASIC and the RBA are also still waiting on a report from the ASX on the outage, with the market operator understood to be reaching out to some to determine the scope of the potential losses from the three-day tech meltdown.

An ASIC spokesman said the regulator was continuing to engage with ASX over the outage.

However, little movement is expected while many staff at both ASIC and ASX are on leave over the holiday period.

ASIC continues to ratchet up its case against ASX over its CHESS replacement failures, alleging the market operator knew its attempts to replace the ageing platform had gone off the rails but told investors otherwise.

ASX eventually wrote off its CHESS replacement project, writing off the $250m spent on the technology.

One industry source said the December outage at ASX signalled the consequences of years of underinvestment in the COBOL-based platform and the loss of talent at the market operator with knowledge of how to tame its archaic language.

Originally published as ASX faces more questions after Austraclear glitch amid anger over CHESS failure