The ASX opened on time this morning but it wasn’t without a few anxious moments.
The stock market operator narrowly averted a prolonged trading outage after a technical glitch disrupted the settlement of billions of dollars in trades last week.
Over the weekend, ASX worked to resolve the issue, however, the daily batch settlement period was extended by 30 minutes to accommodate delayed settlements from Wednesday and Thursday trades.
The incident, involving ASX’s ageing settlement systems, disrupted operations during a critical trading period before the Christmas and New Year holidays.
During a video call on Sunday with more than 170 market participants, ASX executives detailed the cause of the breakdown, assured stakeholders of its resolution and confirmed normal trading and settlement would resume on Monday.
ASX also pledged to waive late settlement levies.
“We are confident we will get through that,” ASX general manager of operations Suzy Munro told market participants.
Group executive, securities and payments, Clive Triance issued an apology for the ASX’s technical problem – a data file error – creating more work for stockbrokers on Friday and over the weekend.
Close watch
One angry broker sought clarity about how much margin would need to be set aside for trades, given the greater risk firms were exposed to.
“If ASX have failed to settle, failed to pay all the brokers on Friday, it would an absurdity that you would then put a larger market margin on brokers because of your failing," said Leigh Conder, the operating chief of FinClear.
"So I’d like ASX to give consideration to that, and the opportunity for all brokers in your bilateral meetings to have that same conversation.”
Triance said the ASX would deal with each firm individually, rather than provide a blanket approach.
ASX chief information officer Tim Whiteley apologised for the disruption.
“We were speaking to customers and stakeholders all through Friday and at points across the weekend,” he said. “We acknowledge there were challenges and we appreciate all their actions to manage the issue.”
Meanwhile, the Reserve Bank of Australia (RBA) and corporate regulator ASIC closely monitored ASX’s response. This latest technical failure follows a significant outage four years ago that resulted in regulatory scrutiny, investor backlash and leadership changes within ASX.
The incident coincided with a sell-off in global and local equities, further intensifying pressure on the market operator.
“We are informed that the ASX has identified the issue and will implement a resolution, and that batch settlement is expected to complete tomorrow,” an ASIC spokesperson said.
“The regulators expect the ASX will ensure the existing CHESS system will continue to be maintained to meet ongoing resilience, reliability, integrity and security requirements.
“ASIC and the RBA will continue to monitor the situation and once the delayed settlement process is complete, we will engage with key participants and the ASX to understand the full impact of the system failure.”