The Australian Securities Exchanges (ASX) has reported technology and operational incidents across the organisation has fallen by 93% over the past five years, with the organisation attributing the drop to its infrastructure upgrades.
For the three years to 30 June 2021, the number of “severity 1” incidents that were recorded was one, compared to the three years to 30 June 2015 where 15 occurred.
The one incident occurred last November when ASX experienced “software issues” when it went live with the refresh of its trade equity platform, causing the exchange to pause trade.
“Investing in contemporary technology has greatly improved the resilience and reliability of our financial markets infrastructure,” ASX CEO Dominic Stevens told shareholders during the 2021 annual general meeting on Wednesday.
“I know this sounds at odds with the regrettable outage we had shortly after last year’s AGM. But as a business that has served the markets for decades, it is our improving performance over months and years, not our performance on a day, which we ask to be measured on.
“If we step back and look at the big picture, we have dramatically reduced operational and technology incidents over the past five years. This trend has continued even in the last 12 months.”
Following last November’s outage, the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) requested an independent review, and the ASX saw fit to hand that responsibility to IBM.
IBM served the ASX with 17 recommendations and found a number of shortcomings in the project, such as noting the trade platform was not ready for go-live.
In acknowledging that review, ASX chairman Damian Roche informed shareholders the exchange continues to address all the recommendations that were made.
“I can assure shareholders that your board takes the resilience and reliability of our markets — and the trust our stakeholders have in our activities — extremely seriously. We learn from our experiences and seek to do things better,” he said.
“That includes learning from the findings and assessments … we are also serious about investing in world-leading technology to serve the market for the next decade and beyond. This investment in improved infrastructure helps unlock innovation. It is also vital for our customers and for the reputation, stability, and competitiveness of Australia’s financial markets.”
Some of the specific ASX tech investments the pair made reference to include the ongoing work to replace the exchange’s 25-year old Clearing House Electronic Subregister System (CHESS) platform with an industrial-scale blockchain-based post-trade solution, which is set for completion in April 2023.
Others include shifting its technology life span to an average of less than five years; refreshing its trading systems; upgrading communications infrastructure used for trading, clearing, settlement, and data information between ASX and its customers; replacing its secondary data centre, risk management and surveillance systems, and website; and automating end-to-end solutions such as removing manual steps from announcements, data capture, and support processes.
Upgrades to its clearing and settlement, and data warehouse technologies are also currently in motion, Stevens added.
At the same time, Stevens noted ASX’s strategy to reduce technology debt has also helped lessen any potentially inherent risks.
“Over the last five years, our capital expenditure program has paid down much of this debt. This transformation is the most important thing the organisation can do to reduce its inherent technology and operational risk. It’s also a key reason underpinning our improved performance,” he said.
After posting a record profit last year of AU$498 million, the Australian Securities Exchange has reported just shy of AU$481 million for FY21.
The ASX has highlighted challenges in relation to custody arrangements on cryptocurrency exchanges, suggesting perhaps a more regulated environment would provide assurance to investors.
The exchange’s CEO reassured shareholders that contemporising technology is an investment in ASX’s core businesses, while providing for other opportunities into the future, despite the outage suffered in November.