The Australian Securities Exchange has once again delayed the launch of its long-awaited technology overhaul, scrapping the deadline for the fourth time and casting doubt over the future of the milestone project.
The ASX was set to launch the CHESS replacement program in April 2023, but the bourse on Wednesday said this was “no longer viable”. The program has been promoted as using blockchain technology to improve core trading services.
ASX group executive Tim Hogben said last year only a war US-China war could delay the CHESS roll-out. Credit: Paul Jeffers
The company has not provided a new timeframe for when the project will go live, in a development the group executive Tim Hogben said was necessary to allow for further consultation.
“I acknowledge the disappointment that we were unable to provide further guidance on key project milestone dates to help with your planning and budgeting for CHESS replacement,” he said. “I can now confirm that April 2023 for go-live is no longer viable.
“ASX’s priority remains to deliver CHESS replacement in a manner that balances safety and efficiency. Ongoing engagement with the industry is a vital ingredient. The existing CHESS system remains robust and continues to perform well in the meantime.”
The ASX has been investing in the technology project since 2017 and the go-live date has been pushed back due to a range of factors including COVID-19, complaints from the industry about lack of consultation and technological setbacks.
ASX deputy chief Peter Hiom was originally responsible for the project but resigned last year after 23 years with the company. Hogben replaced Hiom in overseeing the project, who said at the time only a major geopolitical crisis, such as a war between China, Australia and the US, would further delay the project rollout.
ASX chief executive Dominic Stevens announced he planned to retire this year in February, and a search is underway for his replacement. Ord Minnett chief executive Karl Morris said he would not be surprised if the new chief executive took a different approach to the project.
“I wouldn’t be surprised if there’s some significant different decisions when a new CEO takes over,” Morris said. “To make sure the path they’ve taken is the correct one.”
Former director of the Sydney Futures Exchange, Chris Pedersen, said building technology from scratch was a complex and costly endeavour and a new chief executive could reassess the project.
“It’s easier for a new CEO to pull the plug than an existing one that has been behind it and pushing it,” Pedersen said. “It’s an opportunity to reassess the direction of the company and where to allocate resources.”
Investors did not react dramatically to the news, with ASX’s share price climbing 0.76 per cent to $82.13.
Morningstar analyst Gareth James said the delay would not shift the dial on the ASX’s valuation as analysts had not treated the technology project as a revenue-growing exercise. However, he said the delay-plagued rollout confirmed the perception that the ASX was acting in a monopolistic fashion.
“It’s just more disappointment from the ASX,” Jame said. “ASX have this incredibly strong monopoly that’s detrimental to innovation and efficiency in companies. I’m not hugely surprised to see more delays. They’ve had lots of issues with operational problems and people do leave the company as a result.”
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.