Update on CHESS Capacity and Management of Significant Trade Count Volumes

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  • ASX Market
  • Cash
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  • Equities
  • Exchange Traded Products (ETP) & mFund
  • Options & ETOs
  • Clearing
  • Settlement
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  • Technology
Notice reference number: 1164.20.09
Date published: 22/09/20
Effective as of: 22/09/20
Last updated: 22/09/20

ASX has been actively remediating and upgrading its post-trade infrastructure following the rapid and very large increase in trading activity in March 2020, when the daily record more than doubled to 7.1 million trades on 13 March and ASX systems experienced some processing delays.   

These delays were related in part to multiple consecutive high trade count days, some serialised transaction processing and an ageing technology stack. This underscores the importance of ASX’s decision to replace CHESS with more contemporary technology.

CHESS has handled all trade count volumes since this time, and ASX has supported the steps taken by ASIC to ensure stability and resilience across the industry.

CHESS now has a capacity that can cater for 7 million trades per day, over multiple consecutive days, and will continue to have progressive uplifts in system capacity and performance during 2020 and 2021.

ASX has also reviewed its scenario planning with market operators and the regulatory agencies to manage the risk of potential problematic volumes should this risk materialise during trading hours. 


CHESS remediation

CHESS system remediation addressing hardware, processing efficiencies and performance tuning has successfully improved the transactional throughput of CHESS and key capacity constraints.  These improvements include:

  • CHESS trade registration – message queues significantly reduced with minimal backlogs
  • CHESS daily settlement process – reduced from approximately 60 minutes to 30 minutes
  • CHESS end-of-day (EOD) overnight netting process – average processing time reduced by two hours.

ASX has also upgraded the CHESS’s storage area network (SAN), allowing faster data read and write functions.

It is important to note that intra-day processing capacity of CHESS registering trades must be accompanied with improvements to overnight batch processes.  These include generating corporate action cum entitlement balances, customer reporting, and the requirement to generate net broker obligations (NBOs).  The creation of NBOs is particularly challenging as volumes increase.  This is because the daily overnight NBO process must complete within a short window to allow other overnight batch processes to complete in a timely manner.  Further investigation of options to address these batch processing constraints is being undertaken.


Action by ASX Clear and Settlement in the event of significant trade count volumes

ASX Clearing and Settlement facilities (ASX C&S) has assessed the business and operational controls that could be implemented to manage operational effectiveness, and also the approach that ASX C&S could take in the event of an exceptionally large trade count day, which might impact on the capacity and integrity of CHESS processing, as experienced on 13 March 2020.  ASX actively monitors, in real-time, the trade count volume, market volatility and transaction throughput.  Predictive analysis and scenario planning have leveraged historical trade count volumes and distributions to define thresholds and provide early awareness of potential issues where capacity limits are at risk of being reached.

As a matter of principle, ASX C&S will facilitate and ensure an orderly market by keeping decisions and processes as transparent, simple and consistent as possible. 

If ASX C&S identifies any potential for a processing issue due to extreme volumes, it will engage with regulators and notify all clearing and settlement participants, market operators, and other relevant stakeholders, and continue to provide communication updates on any actions required through direct channels and via the ASX System Status Page.

The potential actions that ASX C&S can, and may, implement are:

  1. Extend start of CHESS end-of-day (EOD) from 7.00pm to 10.00pm until all trade notification messages are disseminated. CHESS EOD processing phase commences at 7.00pm each day.  CHESS EOD allows for various scheduled processing and system administration tasks to be completed (for example, financial products maintenance, corporate action processing, NBO creation, archiving and system backup).
  2. Extend start of CHESS EOD past 10.00pm. If transactions have not been processed by 10.00pm, ASX can further extend the CHESS EOD processing phase past 10.00pm until completion.  It is recognised that this action will likely have significant impact on the market and customers, with potential delay to CHESS start-of-day processing and late opening of the market the following day.  This action is only likely to be implemented if it is a day prior to a non-business day, as was used on Friday, 13 March, the day before Saturday.
  3. Limit the number of trades accepted. If it is identified that there is a risk of capacity limits being reached, ASX C&S may notify market operators that it will limit the number of trades it will accept.  Market operators would be responsible for advising trading participants to take the necessary action.
  4. Stop trade registration. If all other actions have been considered or activated and capacity limits have still been reached, ASX C&S may then advise that it will no longer register trades for clearing and settlement within a specified period.  Market operators will be responsible for taking necessary action to stop trades being sent to CHESS.  As a matter of principle, ASX endeavours to keep markets open, so this action would be taken only under the most extreme and highly unlikely set of circumstances.

In the event that trade registration is to be stopped, ASX C&S will give as much notice as possible, but at least 15 minutes notice, to market operators that it will no longer be registering trades.  All matched trades for registration for clearing and settlement will continue to be accepted by ASX C&S until that point.  Once the advised time for trade registration to cease is reached, no transactions will be accepted from market operators or participants.  It is expected that all market operators and participants will have a process to prevent transactions.

In recognising the need to facilitate the best interests of investors and the market overall, industry consultation and feedback confirms that closing prices from the ASX auction are widely used by stakeholders for a variety of purposes.  ASX C&S will allow for a closing price auction on the ASX market and any other closing price auction that exists. 

What do I need to do by when?

For information only.

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Issued by

Val Mathews
Executive General Manager | Operations

Contact information

Ben Jackson
General Manager | Market, Clearing & Settlement Operations
Email:  Phone: 02 9227 0897

Val Mathews
Executive General Manager | Operations
Email:  Phone: 02 9227 0751