The big change coming to buying shares


The ASX has announced that the CHESS replacement project has entered the delivery phase.

CHESS is the Clearing House Electronic Subregister System, the computer system that the ASX uses to manage settlement and keep track of shareholdings.

The beleaguered system was first introduced in 1994.

ASX announces update to CHESS

An update to CHESS was first slated to go live in April 2021, before a botched attempt to overhaul it with blockchain.

Last week's announcement follows a decision to proceed with a product-based solution developed by global technology firm Tata Consultancy Services.

ASX chief information officer Tim Whiteley says CHESS's replacement has understandably been a focus for its stakeholders.

"This project has a unique set of challenges including the critical importance to millions of Australians, the significant move to international standards, and the large and diverse group of stakeholders," Whiteley says.

"During the past year we have made great progress. Industry consultation on the solution, plan and implementation approach has progressed. Delivery of the first release is underway and the teams from ASX, TCS, our product partner, and Accenture, our delivery partner, are working well together.

"The project is currently expected to deliver to the plan announced in November last year."

In March last year, ASIC informed ASX that it had commenced an investigation into oversight, statements, and disclosures regarding the CHESS replacement project.

ASX chief executive Helen Lofthouse says the market operator is taking this investigation very seriously and continues to cooperate fully with ASIC. Due to the ongoing nature of the investigation, no further comments were provided at this stage.

"Technology underpins everything we do and is crucial to shareholder value. We are undertaking a program of modernisation that ensures that we continue to have resilient, secure, and sustainable technology," Lofthouse says.

"Given the importance of technology to the financial system, we prioritise safe implementation and operation. This is a multi-year program of work, which encompasses the delivery of several major projects alongside an uplift in our platforms and capability to enhance future technology development and the speed of rollouts.

"We have made good progress on this during the past year, including the announcement of the new solution for CHESS Replacement."

ASX also provided a financial guidance forecast reporting that for FY24 total expense growth rate to be approximately 15%, which is at the top end of guidance provided with 2H24 expenses expected to be lower than in the first half.

For FY25, the total expense growth rate is projected to be between 6% and 9%. Excluding depreciation and amortisation, this range is expected to be between 4% and 7%.

Capital expenditure for FY24 is forecasted to be around $135 million, which aligns with previous guidance. For FY25, technology capital expenditure is expected to be between $160 million and $180 million. This elevated range is anticipated to continue through the medium term (FY25 - FY27) before starting to decrease.

ASX also intends to maintain its capital management settings, aiming for a dividend payout ratio of between 80% and 90% of underlying net profit after tax for the medium term. The Dividend Reinvestment Plan will continue to operate as part of this strategy.

This article first appeared on Financial Standard

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Andrew McKean is a journalist at Financial Standard and one of the hosts of the Financial Standard Podcast. He covers superannuation, wealth management and financial advice. Prior to this he has worked freelance for not-for-profit organisations and corporate educators. Andrew has a Bachelor's degree in journalism and non-fiction writing from Macquarie University. Connect with him on LinkedIn or Twitter.