The Australian Securities and Investments Commission (ASIC) today announced its Corporate Plan for the next four years.

The regulator says it will closely supervise ASX’s implementation of the CHESS replacement, including its governance of the CHESS replacement program, the replanning activities so that the market has a high degree of confidence in a revised go-live date and the management of the risks associated with the implementation of the program, including its single cutover approach to migrate to the new system.

ASIC notes that it will monitor ASX Clear and ASX Settlement’s compliance with the additional licence conditions, including the provision of the independent expert’s reports on ASX’s Assurance Program and the status of any remedial actions and attestations by senior executives and the board that the system and ASX is operationally ready to migrate.

ASIC will also keep an eye on ASX’s continued investment and maintenance of the current CHESS system so that it continues to service the market reliably until, at least, the CHESS replacement revised go-live date.

The regulator will also analyse and assess the ASX operating rules changes necessary for the CHESS replacement, and provide ASIC’s advice to the Minister’s delegate as to whether to disallow all or a part of the changes.

Let’s recall that, in November 2021, ASIC announced the imposition of additional licence conditions on three licences held within the ASX Group.

This happened as the regulator concluded its investigation and consideration of the November 2020 market outage at the ASX.

The licence conditions are directed at mitigating risks for future upgrades, with specific emphasis on the oversight of the CHESS Replacement Program.

The additional licence conditions imposed on ASX’s Australian market licence require remediation of underlying issues with ASX operations that led to the November 2020 market outage. Further, the conditions assign accountability to the ASX board and senior executives for the implementation of the remedial actions and require attestations on behalf of the ASX board that adequate controls, procedures, skills, and resources are in place.

The additional conditions imposed on the licences of ASX Clear Pty Ltd and ASX Settlement Pty Ltd require an independent expert to be appointed as approved by ASIC to assess whether ASX’s assurance program for the replacement of CHESS is fit for purpose, identifying any shortfalls, and reporting regularly to ASIC.