TCS CHESS rebuild ‘the best fit’: ASX’s Lofthouse

A decision to use India’s TATA Consultancy Services to rebuild the botched CHESS replacement project is not a lack of faith in blockchain, says ASX chief Helen Lofthouse.

ASX Limited chief executive Helen Lofthouse. Picture: John Feder

A decision to use Indian tech giant TATA Consultancy Services (TCS) to design and rebuild the botched CHESS replacement project was not a sign of a lack of faith in blockchain, ASX chief executive Helen Lofthouse says.

Speaking at an adviser conference in Melbourne on Tuesday, Ms Lofthouse said the market operator would spend the rest of this year consulting experts for the replacement of its ageing CHESS system, as it worked toward a 2026 deadline for implementing the first phase of the multi-year project.

The ASX is also consulting with industry about shifting the Australian equity market to a shorter settlement cycle of T+1 (trade plus one day).

“When we went back to the solution design, my steer to my team was to be really wide ranging and thoughtful in the approach and to look very broadly at the different types of options available,” Ms Lofthouse told the Stockbrokers and Investment Advisers Association conference.

“And absolutely one of the options the team looked hard at was the distributed ledger approach and what we needed to do with that to get it to a point where it was going to reach the standards that we wanted.

“The choice of TCS for CHESS really reflects the fact that that solution was the best fit that we found and what we felt would be really delivering the best outcome for the Australian market.”

ASX is working toward implementing phase one of its replacement project under which it will deliver clearing services through the new system in 2026.

“The work right now is really around working groups, focus groups, and then consultation processes,” Ms Lofthouse said.

“We put the consultation out a little while ago for release one; that’s really asking for feedback both on that phased approach and also on the detail of the phase-one clearing services part.”

The ASX expects to issue a response on that consultation “fairly soon”, she said.

“Later in the year we’ll be putting out another consultation on release two, and in particular on release two we’ll also be looking at some work around scope. So there’s been a number of areas where people across the industry have made suggestions for potential changes in scope and how settlement services in particular are working,” Ms Lofthouse said.

The disastrous CHESS replacement project has had numerous delays and cost the ASX hundreds of millions of dollars in writedowns as well as the departure of its chief executive and chief financial officer.

ASX in late 2023 confirmed it had tapped India’s TCS to design and rebuild the project.

Ms Lofthouse said the ASX had set up a working group to assess the possibility of moving to a T+1 settlement cycle.

“There are a range of different impacts across the industry, it’s a very diverse industry with lots of different types of participants in the market,” she said.

“And T+1 will have different impacts for different groups, different benefits and different challenges. So the really important thing is to gather a broad range of views.”