The Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) (the regulators) are today publishing a summary of an independent expert review of the ASX Trade Refresh project (see 21-220MR). The review was conducted by IBM Australia Limited.
On 16 November 2020, an outage occurred shortly after a major upgrade to ASX's equity trading platform, ASX Trade. The regulators view operational incidents of this nature with significant concern. To examine the issues, the regulators informed ASX of their expectation that an independent review of the ASX Trade Refresh project be conducted in the first half of 2021.
The purpose of the independent expert review was to examine the project and assess whether it met internationally recognised standards or frameworks and relevant securities industry practices. Overall, the independent expert found that ASX met or exceeded leading industry practices in a majority of the capabilities assessed. However, the independent expert identified several key shortcomings in the project. These included: factors suggesting that the ASX Trade system was not ready to go live considering ASX's near-zero risk appetite for service disruption; gaps in the rigour applied to the project delivery risk and issue management process; and that it was not reasonable to conclude that ASX's test plan was consistent with its risk appetite. The independent expert made recommendations in seven key categories: risk, governance, delivery, requirements, vendor management, testing and incident management.
ASX has provided the regulators with its high-level response to the independent review. The regulators note that ASX has agreed to address the recommendations from the review, and apologised for the disruption to the market.
The regulators expect ASX to apply the insights from IBM's findings across the ASX Group to ensure existing and proposed projects, including the CHESS replacement program, are managed and implemented appropriately.
Background information
The RBA has supervisory responsibilities for the four clearing and settlement (CS) facilities in the ASX Group: two central counterparties – ASX Clear Pty Limited and ASX Clear (Futures) Pty Limited – and two securities settlement facilities – ASX Settlement Pty Limited and Austraclear Limited. The RBA conducts annual assessments covering the CS facilities' observance of relevant Financial Stability Standards determined by the RBA.
For more information on the RBA's approach to supervising and assessing CS facilities, see: The Reserve Bank's Approach to Supervising and Assessing Clearing and Settlement Facility Licensees.
ASIC has separate, but complementary, responsibilities for the supervision of CS facilities. ASIC also has regulatory responsibilities for operators of licensed markets, including the ASX market. In carrying out supervision and assessments of CS facilities, the RBA works closely with ASIC as appropriate.
