The Reserve Bank of Australia (RBA) wants to see the “safe and timely” replacement of CHESS remain a “high priority” for the ASX.

In its latest assessment of the ASX’s clearing and settlement facilities, the RBA carried out a detailed review of the ASX’s planned replacement of the CHESS clearing and settlement system for cash shares.

It found that the target state for the replacement system “largely meets” the relevant standard, but decided that “further assurances” would be needed to verify that the system would meet those standards in practice.

"The Bank was disappointed by the delay in the launch date of the CHESS replacement," the RBA stressed.

"ASX will need to demonstrate that appropriate measures are in place to manage the risks associated with its reliance on key suppliers," he noted, adding that he would "work closely" with ASIC in overseeing ASX's response to these matters .

Commenting on the bank's latest findings, Assistant Governor Brad Jones said: "The clearing and settlement facilities of the ASX are critical to the smooth functioning of the Australian financial system."

“It is important that the ASX further strengthens its governance and risk management measures to the high standards expected of critical market infrastructure. A safe and timely replacement of CHESS must also remain a high priority for the ASX.”

After announcing a further delay in the CHESS replacement project schedule in August, CEO Helen Lofthouse said more development was needed in parts of the application software to meet market demands for scalability and resilience.

"We have commissioned an independent review of the application from Accenture to examine specific areas in the application that present challenges, consider possible solutions and provide input on the implementation schedule," she said.

“I'm disappointed that we've extended the go-live schedule for a third time, and I know our customers are disappointed as well. But we all agree that the new CHESS must be implemented safely and with the functionality to serve the needs of the market.”

The latest delay follows two earlier announcements made in March and May.

At the time, both ASIC chairman Joe Longo and RBA governor Philip Lowe reacted unfavorably to the delay announcement, with Mr Longo calling the news "very disappointing".

The project was originally expected to be completed in the fourth quarter of 2020 at the earliest, before it was hit by multiple setbacks, including the impact of the COVID-19 pandemic.

Maja Garatsa Djurdjevic

Maya's career in journalism spans more than a decade in finance, business and politics. Now an experienced editor and reporter in all elements of the financial services sector, before joining Momentum Media, Maya reported for several established news outlets in South East Europe, looking at key processes in post-conflict societies.