The Australian Securities Exchange (ASX) is set to engage a third party to modernize its outdated clearing and settlement system. The exchange plans to adopt Tata Consultancy Services’s (TCS) platform to replace its legacy Chess platform, which has been in operation since 1994.
This decision follows ASX’s cancellation of its internal project aimed at developing a blockchain-based replacement for Chess, which was officially abandoned in late 2022 after facing significant cost overruns and delays. The initial blockchain initiative, first introduced in 2016, garnered considerable industry attention and was positioned as a pioneering use of distributed ledger technology (DLT) with a target implementation date of 2021.
Under the new plan, ASX will license the BaNCS for Market Infrastructure platform from TCS in two phases, starting with an estimated cost of around A$125 million (approximately $82 million). Despite previous speculation that Nasdaq might secure the contract, TCS’s platform is already in use for settlement and clearing at the New Zealand Stock Exchange, as well as in South Africa and Finland.
ASX CEO Helen Lofthouse highlighted that while the transition will be intricate and lengthy, the staged rollout approach aims to mitigate risks and deliver project benefits sooner. However, the implementation will not incorporate blockchain or DLT for now, though there is potential for these technologies to be integrated in the future. The projected timeline indicates that stage 1 will be completed around 2026, followed by stage 2 expected to conclude by 2029. According to Lofthouse, the legacy system may still be operational as late as 2032.