The Australian Securities Exchange (ASX) is set to act upon the recommendations issued by the Reserve Bank of Australia (RBA), following the latter's 2023 Financial Stability Standards assessment, which was carried out on Monday. The RBA's assessment has directed ASX to prepare a detailed upgrade plan by the end of the year, focusing on the issues of outdated software and ageing hardware in its critical clearing and settlement facilities, such as ASX Clear and ASX Clear (Futures).
The central bank highlighted operational risks associated with end-of-life software that lacks security updates and old hardware that could lead to system processing and capacity issues. While acknowledging ASX's efforts to manage some ageing asset-related problems, the RBA concluded that their approach was not sufficient for maintaining secure, efficient, and resilient systems.
The assessment covered a year-long period during which ASX reassessed its CHESS replacement project, revisited the solution design, initiated a board renewal program, underwent significant executive management changes under new CEO leadership, launched a five-year strategy, and adjusted capital management settings.
The RBA emphasized the need for enhancements in board processes, internal audits, stakeholder management, and management of ageing technology assets. Notably, ASX's progress in regulatory reporting and improved engagement with the RBA were commended.
In response to the assessment, ASX's Damian Roche and Helen Lofthouse have accepted the recommendations. They acknowledged the ongoing efforts to build an enduring and high-quality business. The implementation of these recommendations is expected to bolster ASX's technological resilience and operational efficiency.
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