Alan Cameron tells hearing that ASX oversight group won’t be railroaded on CHESS replacement

The chairman of an independent body overseeing ASX’s delayed CHESS project has told a parliamentary hearing that it won’t be rushed into approving a replacement plan.

Former ASIC head and now chairman of a panel overseeing ASX’s CHESS replacement project Alan Cameron. Picture: Britta Campion

The independent chairman of the advisory group overseeing ASX’s CHESS replacement project says the body won’t be railroaded into approving the market operator’s decisions on the heavily delayed clearing system.

Alan Cameron told the Parliamentary Joint Committee on Corporations and Financial Services on Friday that ASX Cash Equities Clearing and Settlement Advisory Group could also prologue the market operator’s “grand plan” if it needed time to probe the design or make more recommendations.

The ASX appointed Mr Cameron as independent chairman of the ASIC-imposed industry group that will advise on strategic matters regarding the bourse’s botched CHESS clearing and settlement project.

Mr Cameron said the advisory group wanted to receive details on the new clearing and settlement system plan by October 31.

ASX told shareholders at its annual meeting on Thursday that it would be in a place to announce the solution design by the end of December.

“I haven’t seen the grand plan and I don’t know what it looks like or what’s in it, but I’m expecting that we will get from the ASX prior to our meeting on October 31, a lot of specific information as to what the CHESS replacement project in overall terms will look like now,” Mr Cameron said.

“We’re not supposed to be and we won’t be railroaded into making a decision … we will not make the decision until we have the information we need to make it.”

Mr Cameron said if the group concluded on October 31 there was a gap in ASX’s plan for its CHESS replacement, there would be an opportunity to ask for it to be addressed before it meets again on November 9 or to say “well, we’re not going to make a decision”.

The ASX Cash Equities Clearing and Settlement Advisory Group has 10 members including Mr Cameron and ASX chief executive Helen Lofthouse, which the hearing heard would excuse herself from some deliberations to avoid interference from the market operator.

Other members are Scott Webster, Belinda Gibson, Chris Williams, David Travers, Marnie Reid, Richard Burns, David Braga and David Ferrall.

Mr Cameron said he felt “twin pressures” from a number of parties to ensure that a fast decision on the CHESS replacement was made.

Meanwhile, the Oversight of ASIC, the Takeovers Panel and the Corporations Legislation inquiry heard from Ms Lofthouse that the market operator supports the settlement on shares falling to one day as part of the new CHESS system, but added that the market was mixed on whether it would be advantageous.

She added that market players were concerned about increased settlement failure rates if ASX moved from T+2 to T+1.

“T+1 could result in significantly increased settlement failure rates so by shortening the cycle that’s available for getting the securities into the right place and getting the funding into the right place, particularly in for example the US time zone, that might shift to customers needing to pre-fund those transactions or cause funding challenges,” she said.

“In Australia even today our T+2 is really about T plus one and a half because we actually settle midday on T+2.”

Ms Lofthouse said that it was a complex topic from an ASX perspective given that US traders were already operating on a T+1 given the time difference, but that the market operator supported the move on either its new CHESS platform or the current system.