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RBA weighs in on recent ASX system outage

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The Reserve Bank of Australia (RBA) has today weighed in on the recent system failures at ASX Ltd (ASX: ASX). The market exchange’s co-regulator says it is “concerned about the recent operational issues affecting CHESS and ASX’s trading systems, and will be working to understand if there are systematic underlying issues.” 

What else did the RBA say?

During the Reserve Bank’s Payments System board meeting today, the panel said it’s worried about this week’s system outage at ASX, and whether there were systemic operational issues that needed to be looked at. The RBA is awaiting ASX’s final investigational report regarding this issue. 

The RBA also outlined its expectations of ASX from both the Australian Securities and Investment Commission (ASIC) and the RBA itself. Both ASIC and the RBA are the regulators of ASX. 

Replacing CHESS

The bank says that the regulators expect ASX to replace CHESS as soon as this can be safely achieved. CHESS is a critical clearing and settlement system for the Australian cash equity market. It contributes to investor confidence, the reduction of systemic risk, and the performance and stability of the Australian financial system.

The RBA says the importance of replacing CHESS in a safe and timely manner was particularly highlighted in recent record trading volumes, and the associated CHESS processing delays observed in March. The bank went on to say that, in implementing the replacement, ASX should take into account CHESS user feedback on a revised implementation timeline. In April 2018, the ASX had sought feedback from its users regarding the scope and implementation of replacing the CHESS system. By September that year, ASX had confirmed the scope and timeline based on the feedback. 

The RBA also says that ASX is expected to demonstrate the readiness of the CHESS replacement system, and will be required to provide supporting independent assurances to the regulators before migrating to the new system.

Earlier this week, ASIC tore into the market operator after it experienced continuing glitches in its Centre Point matching system, just a day after the market was closed down early when the ASX trading systems froze 24 minutes after the morning opening bell.

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