Phase 1 of The ASX’s CHESS System Went Live Without a Hitch! But Unfortunately, The Job’s Not Done Just Yet

After a decade of delays, a A$250m write-off, regulatory lawsuits, and a CEO departure, Release 1 of the ASX’s CHESS system went live this morning. It is a genuinely significant milestone.

For a project that first entered planning in 2016, burnt through one vendor, wrote off a quarter of a billion dollars, attracted ASIC litigation, and missed at least four publicly announced go-live dates, the word “milestone” is in one sense inaccurate because this should have been easier, but ultimately it is a milestone that Phase 1 is live. That is the good news.

The not so good news is that Release 1 covers clearing only roughly half of the total scope. The settlement and sub-register functions that form Release 2, estimated to cost A$270–320m and targeted for 2029, remain on the old infrastructure. The CHESS project is not finished; it has crossed its first finish line.

Background: A Decade of Failure and Reset

CHESS (the Clearing House Electronic Subregister System) has underpinned Australian equity market infrastructure since 1994. It handles the settlement of trades and the management of shareholdings for every stock traded on the ASX. By the mid-2010s, regulators, market participants, and the ASX itself recognised the system was ageing, limited in capability, and increasingly misaligned with global post-trade standards.

In 2017, the ASX committed to replacing it in partnership with Digital Asset (DA), then a pioneering blockchain technology firm. The vision was ambitious: a distributed ledger-based system that would modernise Australia’s post-trade infrastructure and position the ASX as a global leader in settlement technology. The original go-live was set for 2020, then pushed to April 2022, then April 2023. Each delay was accompanied by reassurances of progress.

The reassurances proved unreliable. In August 2022, the ASX announced the April 2023 deadline could not be met and commissioned an Accenture review of the program. That review produced damning findings on delivery governance. In November 2022, the ASX formally derecognised the DA software, writing off A$250m — ironically, almost precisely what the eventual replacement would cost! ASIC filed proceedings in August 2024 alleging that ASX had misled investors by stating in February 2022 that CHESS was “on track for go-live” and “progressing well” when those claims allegedly lacked a reasonable basis. ASX denied wrongdoing. The litigation remains on foot.

Attempt 2 was announced in November 2023. ASX engaged TCS to build a modular, cloud-based platform, with delivery staged across two releases. The total budget was set at A$445m — nearly A$200m more than the A$250m written off on the original attempt and a figure that drew an immediate negative market reaction, with ASX shares falling 4.3% on the announcement. Helen Lofthouse, the CEO who made the difficult decision to kill the blockchain project and reset the programme, announced in February 2026 that she would depart following Release 1 go-live — the board describing the milestone as a “natural inflection point” for leadership change. That inflection point arrived this morning.

What Happened Today: Phase 1 of the CHESS System is Live!

Release 1 delivers the new clearing services component of CHESS. This is the system by which Approved Market Operators (AMOs) and their software providers submit and receive trade acceptance notifications — the infrastructure that confirms a trade has been matched and cleared before it proceeds to settlement. The new system adopts ISO 20022 messaging standards, replacing the proprietary messaging format that CHESS has used since 1994. That shift alone is significant: ISO 20022 is the global standard now used across major market infrastructures internationally, and its adoption creates a foundation for Australia’s eventual integration into global post-trade workflows.

The cutover was planned as a single weekend event: a conscious decision by ASX to avoid the complexity of running two parallel production systems. The ASX’s own hypercare communications plan, published in February, outlined a clear sequence for today: a 7:30am AEST start-of-day confirmation following overnight weekend processing, followed by a 10:30am clearing service health check and the release of held trade notifications. A market open of 10:00am was targeted. As of market open, clearing operations appear to be running as planned.

Some might say it has gone off “without a hitch” and so far as visible hitches go, that is true. Post-go-live system performance is assessed in what ASX terms a “hypercare” period: a heightened support model in which market participants report incidents through BAU channels with escalation paths directly to the CHESS project team. The first test will be whether end-of-day clearing processing completes cleanly. Settlement itself (which remains on the old system under Release 2) continues on the existing T+2 infrastructure and is not affected today.

What Remains: Release 2 and the 2029 Target

Release 1 is clearing. Release 2 is everything else, and it is the heavier lift. The settlement and sub-register functions are the components that directly interact with share ownership records, including the maintenance of CHESS-sponsored holdings for retail and institutional investors. Release 2 is estimated to cost A$270–320m and is targeted for 2029, though ASX has been careful not to commit to a specific month. The Release 2 Industry Test Environment (ITE2) opened on 30 March 2026, enabling software providers to begin build and test activities in parallel with today’s clearning go-live.

Release 2 also carries the most consequential downstream implication for Australian investors: the shift to T+1 settlement. Currently, ASX equity trades settle two business days after execution (T+2). The US moved to T+1 in May 2024. The UK and Europe have been progressing toward T+1 with 2027 target dates. Australia has explicitly stated that T+1 cannot go live before 2030 at the earliest – contingent on Release 2 completing successfully. For institutional investors managing cross-border portfolios, this gap in settlement cycle alignment creates ongoing operational friction. The pressure to accelerate is real, but the infrastructure dependency is non-negotiable.

Release 2 will also introduce functional changes to how shareholdings are registered and transferred, incorporating the ISO 20022 data model into the sub-register. That creates operational change requirements across registries, custodians, brokers, and corporate action processing teams — a coordination task that dwarfs the clearing-only scope of Release 1.

What This Means for ASX

The ASX (ASX: ASX), both as an organisation and a listed company, finds itself a materially different stakeholder posture than it held a year ago. The ASIC Inquiry Panel report, published in March 2026, required ASX to submit a Commitments Plan and imposed a A$150m capital charge on its net tangible assets to be implemented by June 2027. A new CEO search is underway, led by Korn Ferry. The company reduced its 1H26 dividend payout ratio from 85% to 75% of underlying NPAT to assist with the capital charge requirement.

Release 1 going live does not resolve those regulatory commitments or change the litigation outcome. But it removes the most operationally critical uncertainty that has hung over the company for nearly a decade. A functioning new clearing system is no longer a target — it is a live production environment. For a business whose core value proposition is the integrity and reliability of critical market infrastructure, that matters enormously.

The more demanding test is whether Release 2 arrives in 2029 on budget and without the governance failures that defined the DA era. The ASIC litigation is a reminder that the market will be watching the disclosure standards applied to that project just as carefully as the technical ones. ASX has rebuilt some credibility today. It has not yet rebuilt all of it.