(Reuters) -Australian bourse operator ASX Ltd said on Thursday it would take a pretax charge of up to A$255 million ($172 million) in the first half as it derecognises the software being developed to replace its ageing clearing and settlement system.
The replacement has been paused following a review of the project and independent findings that led ASX to conclude there were “significant technology, governance, and delivery” challenges with the solution design of the project.
The software was intended to replace ASX’s Clearing House Electronic Subregister System (CHESS) “to improve functionality and efficiency, and adopt global standards”.
“It’s clear we need to revisit the solution design as well as validate and test the feedback from the independent review to assess changes required to bring the project to market safely, efficiently and for the long-term,” Chief Executive Officer Helen Lofthouse said.
Australian securities regulator ASIC and the Reserve Bank of Australia in a joint statement said they expect the replacement program to be brought back on track once the solution design meets ASX’s commitment for safe and reliable infrastructure.
“ASX has rightly recognised that pausing the program while it revisits the technology design for the CHESS replacement was a necessary decision,” ASIC chair Joe Longo said.
The two regulators expect ASX to foot the bill entirely on any write-downs associated with the halt of the project, saying “industry has incurred significant cost to date on the CHESS Replacement program”.
All current activities on the replacement project have been paused as ASX revisits the solution design, the bourse said. It added that the current CHESS remains secure and stable, and was performing well.
The bourse said the one-off charge of between A$245 million and A$255 million will have no impact on its dividends, and that it maintains its dividend policy of 90% of its underlying net profit after tax.
($1 = 1.4841 Australian dollars)
(Reporting by Sameer Manekar in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)
