The Australian Securities Exchange (ASX) needs to strengthen board oversight of technology projects and equip directors with the skills to do so, the Reserve Bank of Australia (RBA) has said.
The recommendation was made in an assessment [pdf] of the ASX clearing and settlement facilities, released Wednesday, and was immediately supported by the exchange.
At the ASX AGM earlier in the day, ASX chairman Damian Roche said that “strengthening the technology, cyber security and project management-related expertise of the board are areas of priority.”
The RBA assessment went further, stating that the ASX chair “is considering the establishment of a technology project implementation board committee, [which] may include members who are not ASX group directors but have skills, experience, understanding and personal networks which can assist the ASX Boards in their supervision of technology projects.”
However, the RBA went on to say that “the establishment of such a committee does not of itself discharge the responsibility of all directors to develop and maintain their understanding of all aspects of the clearing and settlement (CS) facilities’ risks and businesses.”
The RBA said that “more intensive board oversight” of technology projects “is required”, and that directors that sit on the boards of the ASX CS facilities needed “access to skills, experience and networks relevant to large technology project implementation[s]”.
The ASX had a high-profile technology incident in November last year when a premature system go-live caused a full-day trading outage.
The exchange is also pursuing an ambitious project to use digital ledger technology for its post-trade clearing and settlement system in place of ageing system called CHESS.
The RBA said its interviews with directors uncovered "that there were periods during 2019 and/or 2020 when the ASX boards were not fully informed of the progress and status of the CHESS replacement program."
Interviewees said that the "level of challenge [for technology project oversight] has increased following recent events" at the exchange.
They also reported being overwhelmed by "excessive technical detail" that made it difficult to engage with stakeholders on technology projects.