ASX said in April the earliest commencement date for the new system would be September 2020 and might extend to March 2021.

It said on Tuesday it is now targeting switching on the blockchain in March or April 2021. So the refined timetable pushes the "go live" date to the back end of the previously identified window, which was initially set wide ahead of the consultation.

"Respondents questioned whether the proposed implementation window of Q4 2020 to Q1 2021 was achievable given the significance of the technology change and the range of new scope being introduced," ASX said on Tuesday.

The exchange also said it would provide an additional six months for users to develop and test the system and it would defer the commencement of industry-wide testing by six months. It also said it would extend mandatory accreditation by six months.

It will not make any changes to the timetable for its own analysis, build and testing of the technology, which is currently under way and set to conclude at the end of August 2020.

"With these revisions ASX is confident that a successful market-wide implementation of the CHESS replacement system will now be achieved," ASX said in its update.

'Significant collaboration'

The upgrade to CHESS will have a wide-ranging impact across the financial markets. ASX received 41 written submissions on the program from clearing and settlement participants, market operators and share registries, payment providers, back office technology vendors and industry associations representing issuers, brokers and custodians.


ASX said as a result of the consultation it would lighten the load on its customers by pushing back some of the functionality that will be required on "day 1", including the need for a "common investor number". It will also defer changes to settlement processes relating to the efficiency of messaging and corporate actions relating to the transfer of entitlement balances. ASX will bring forward the linking of off-market settlement with on-market transactions, to allow them to be managed collectively, after more participants expressed interest in this being part of the initial functionality.

ASX told investors last month the new technology would help slice costs spent on database reconciliation, but it appears brokers are concerned about it creating additional costs for tech development and regulation. Connection to the blockchain will require new developers and existing software to be updated.

ASX said it had carefully considered feedback about the development and testing workload and the regulatory work that would need to be addressed prior to implementation.

"ASX acknowledges that there is a desire for more detailed information in specific areas in order to further progress necessary planning and budgeting," it said.

The majority of respondents supported, or expressed no objection to, its plan for a single "cutover" date to switch on the system, which will take place over a weekend. It said this is preferable to running duplicate systems.

ASX said when it reported its full-year results in August it would lift capital expenditure from $54 million in 2018 to between $70 million and $75 million in the 2019 financial year, including costs for the ongoing development of its blockchain, also referred to distributed ledger technology (DLT). It has been consulting with the market for almost two years on the technology.

It said on Tuesday the industry benefits of the DLT solution include: reduced risk, cost and complexity through improved record keeping; reduced need for reconciliation between multiple databases; more timely transactions and better quality source of truth data.

"We do not underestimate the challenge to replace CHESS and transition the market to the new system," ASX said. It would "support users through this critical industry-wide change program".

ASX said its focus would now turn "to providing users with the more detailed information necessary for them to further progress planning and development in preparation for the transition to the new system".

"There will continue to be significant collaboration with stakeholders over the entire project. ASX will ensure that further technical information, support and systems environments that customers and their vendors will need to connect to the new system are provided with sufficient lead times."