When the Australian Securities and Investments Commission (ASIC) filed a lawsuit against the Australian Securities Exchange (ASX) on 13 August 2024, it reignited a nightmare that has already obliterated over $250 million in enterprise value—the CHESS Replacement Project. So, what exactly went wrong, and what lessons can be learned from this costly debacle?

The ASX CHESS Replacement Project was meant to be a technological revolution, a shining example of how the Australian Securities Exchange (ASX) could step boldly into the future by modernizing its aging Clearing House Electronic Subregister System (CHESS) using Distributed Ledger Technology (DLT). The stakes were high, as CHESS underpins the very infrastructure of Australia’s financial markets, facilitating the seamless clearing and settlement of trades. But as the years rolled by, what was envisioned as a groundbreaking transformation slowly turned into a cautionary tale of how ambition, when not tempered by disciplined management, can lead to costly failure.

As the project struggled to maintain its momentum, deeper cracks began to show. The Accenture report highlighted a critical failure in the structured approach to defining requirements and ensuring design discipline. Without comprehensive design artifacts and rigorous processes, the project floundered under the weight of technical complexities that could have been anticipated and mitigated. The core issues—ranging from latency and concurrency problems to batch processing constraints—were all symptoms of a deeper malaise: the misalignment of functional and non-functional requirements. This misalignment created a domino effect, where small technical issues ballooned into major project risks, further complicating an already fraught timeline.

Quality management, too, fell by the wayside. Testing practices were inconsistent, with ASX and DA operating on different schedules and priorities. The lack of synchronized efforts meant that testing was often reactive, driven by the need to fix what had already gone wrong rather than proactively ensuring that the system would work as intended. This piecemeal approach to quality assurance led to significant rework and retesting, dragging the project further behind schedule. And as the testing cadence faltered, so did the project’s visibility into its own progress. Defect management tools were inadequate, and performance monitoring was an afterthought, leaving the project without the data it needed to course-correct.

By the time the project reached its critical phases in 2022, it was clear that poor program and project discipline had not just slowed progress; it had fundamentally undermined the project’s viability. Despite over half of the project’s scope being delivered for testing, the most critical components—those that would ensure the system’s performance and reliability—remained unfinished. The need for extensive refactoring of core functionalities like the Settlement Engine and Holdings system added further delays, requiring additional rounds of testing and further sapping the project’s dwindling reserves of time and budget.

Ultimately, the Draft Delivery Plan, which should have been a roadmap to completion, became a litany of risks and uncertainties. Without a robust methodology for managing scope, estimating effort, or building in contingencies, the plan was little more than a high-risk gamble with low confidence of success. The project, once heralded as a leap forward for ASX, had become a textbook example of what happens when ambition is not matched by disciplined execution.

The failure of the ASX CHESS Replacement Project offers valuable lessons for any organisation undertaking large-scale transformations. It underscores the critical importance of holistic program management, rigorous design and requirement practices, and a relentless focus on quality. Without these disciplines, even the most well-intentioned projects can unravel, leading to not just financial loss, but also reputational damage and a loss of stakeholder trust. The ASX experience serves as a stark reminder that in the world of project management, discipline is not just a virtue—it is a necessity.

References

• Australian Securities and Investment Commission, ASIC sues ASX for alleged misleading statements. Media Release (24-177MR).
• The Australian Financial Review, ASIC alleges ASX misled the market formonths on botched CHESS upgrade, 14 July 2024.
• Accenture, ASX CHESS Replacement Application Delivery, November 2022