The Australian Securities Exchange (ASX) is planning to turn to a third party to replace its ageing clearing and settlement system.
The exchange is set to select Tata Consultancy Services's (TCS) platform as the replacement for its legacy Chess platform which was originally implemented in 1994.
The news comes almost a year after ASX officially scrapped its own project to replace Chess with an internally developed, blockchain-based system.
The original plan was first announced in 2016 to much industry fanfare. It was seen as an early endorsement of distributed ledger technology (DLT) and would have been the first example of a major platform using the technology, if it had met its original 2021 implementation date.
However, escalating costs and series of delays and postponements led the ASX to eventually abandon the project in last 2022.
Now, the exchange plans to license the BaNCS for Market Infrastructure platform from TCS in two staged releases. The cost for the first stage of the project comes in at around A$125m ($82m).
It had originally been thought that Nasdaq qould win the contract for supplying the new system, as was stated by a senator in a parliamentary hearing on the subject back in June.
However, the TCS platform is used for settlement and clearing on the New Zealand Stock Exchange as well as the national exchanges in South Africa and Finland.
According to ASX chief executive Helen Lofthouse, there will still be a lengthy implementation process that could see the existing legacy system still in place in 2032.
“There is still plenty of distance to go: this is a big and complex project, whichever way you look at it, and we will need to manage it carefully,” she told The Australian Financial Review. “But a staged release will allow us to reduce the overall delivery risk, and also get the benefits of the project at an earlier stage.”
There will be no blockchain or distributed ledger technology involved in the implementation, although Woodhouse did say this could be added at a later date.
The estimated implementation date for stage 1 is some time in 2026 while stage 2 is slated to be completed by 2029.