Australian stock exchange operator ASX announced on Monday, November 20, a strategic partnership with Tata Consultancy Services (TCS) to revamp its trading, clearing and settlement system. This development follows months of investigation after ASX withdrew a blockchain-based system overhaul last year.
ASX outlined its plan to implement the new product-based platform in two major releases. The first release will focus on providing the clearing service, followed by the second release focusing on settlement and sub-registry services. “The Clearing House Electronic Subregister System (CHESS) replacement project will now move into the next phase of detailed design and implementation, with further stakeholder consultation commencing in the first quarter of 2024,” ASX said in a statement.
Under the agreement, TCS will leverage its TCS BaNCS for market infrastructure products – a modular technology platform designed for clearing and settlement services. ASX highlighted that the versatile design of the TCS product is suitable for various clearing and settlement models and account structures used globally.
The estimated cost for the initial release is expected to be between $105 and $125 million, spread over several years.
“The TCS product has evolved significantly over the years to accommodate the diverse clearing and settlement models and account structures used in different regions worldwide,” the statement said, adding that the product’s design is well suited to support the introduction of new features. and services in the future.
Meanwhile, the second release is expected to be determined by the end of next year, after consultation with stakeholders. “This phased approach is expected to reduce overall supply risk and help manage the impact on industry stakeholders, compared to a single ‘cut-over’ approach,” ASX said in a statement.
ASX Managing Director and CEO Helen Lofthouse highlighted the importance of obtaining input from customers and industry stakeholders to ensure the chosen solution serves the entire market. Lofthouse acknowledged the future multi-year commitment and assured that ASX would continue its investment in the current CHESS platform to ensure continued efficient and reliable operations until the replacement is fully implemented.
ASX’s decision to proceed with the TCS product took into account input from the Chess Replacement Technical Committee, the ASX Business Committee and advice from the Advisory Group, in line with the industry objectives and scope of the project.