The Australian Securities and Investment Commission has imposed new restrictions on the country's national stock exchange following a botched technology upgrade in November 2020 that stopped trade for a day.
Asic says the new licence conditions are directed at mitigating risks for future upgrades, with specific emphasis on the oversight of the long-delayed Chess Replacement Programme, a DLT-based post-trade settlement platform that is due to go live in April 2023.
"The ASX outage was a very serious event, exacerbated by subsequent operational issues," says Asic chair Joe Longo. "The imposition of these licence conditions will confirm that remedial actions are implemented appropriately and efficiently to address these operational issues - including for the critical rollout of the Chess Replacement Programme."
The Exchange operator was forced to shut down for business for a whole day after a software glitch in a new trading system provided by Nasdaq disrupted the market opening. The tech snafu created inaccurate market data during the trading of multiple securities in a single order.
Asic's report into the downtime notes serious deficiencies in ASX’s and market participants’ ability to limit the impact on overall liquidity highlighted by the outage.
In an unprecedented step, the regulator is to install an independent expert to assess whether ASX’s assurance programme for the replacement of Chess is fit for purpose, identifying any shortfalls, and reporting regularly to Asic.
Says Longo: "Asic’s actions today are all about ensuring the efficient and effective future operation of Australia’s financial markets infrastructure. ASX and market participants must act to ensure that the market can function at all times, so that vital sources of capital are available to the economy."