ASX faces rising costs for Australia’s CHESS upgrade

Investors criticised escalating expenses for the ASX’s CHESS project, with completion delayed until 2029.
ASX shares fell sharply as the cost of a critical software upgrade surged to A$320 million.

The Australian Securities Exchange (ASX) faces rising expenses as the second phase of its software upgrade is now expected to cost up to A$320 million. Completion of this stage is projected for 2029, with the first phase, focused on clearing services, set to finish by 2026 at an increased cost of up to A$125 million.

Investors reacted negatively to the announcement, sending ASX shares down 4.7% to A$65.87, the steepest fall since mid-June. Citi analysts noted the escalating costs are driving capital expenditure towards the higher end of earlier guidance. The news comes amid heightened scrutiny of the bourse operator’s project timelines and expenditure.

ASX initially hired Tata Consultancy Services to revamp its CHESS system after abandoning a blockchain-based upgrade that led to a A$250 million write-down. Regulators and shareholders criticised the failed project, prompting a lawsuit from the Australian Securities and Investments Commission for allegedly misleading investors.

CEO Helen Lofthouse defended the new approach, citing enhanced reliability with a phased implementation. The TCS software, already operational in markets like New Zealand and South Africa, is intended to restore confidence. However, analysts suggest the company’s focus remains on meeting regulatory demands, leaving investors waiting for returns.