Review of ASX November 2020 Market Outage Completes
The independent expert review of the ASX market outage that occurred after a new version of the Nasdaq equity market trading system went live on Monday 16 November 2020 has been completed.
ASX commissioned the review by IBM in consultation with the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA).
The review’s report makes recommendations across seven categories. IBM’s summary of its recommendations is attached.
ASIC and the RBA have issued their responses today. ASX is engaging closely with both regulators and will address all of the report’s recommendations. ASX’s actions reflect our commitment to continually improve our resilience by implementing learnings from incidents and outages, and to ensure we maintain a contemporary technology base.
ASX to address all the independent expert’s recommendations
Dominic Stevens, ASX Managing Director and Chief Executive Officer, said: “Last November’s market outage fell short of ASX’s high standards. We believed that the software was ready for go-live, as did our technology provider Nasdaq. Clearly there were issues, which was particularly disappointing given the significant progress we have made on resilience in recent years.
“We acknowledge the findings in the report. It’s pleasing that ASX met or exceeded leading industry practices in most areas. But the report does point to some important areas for improvement and we will address all of its recommendations.
“ASX is well advanced in developing a detailed response plan for execution over the next 12 to 18 months, and we’ll commission the independent expert to review our actions to meet its recommendations. Our delivery of this program of work will be under the oversight of ASIC and the RBA.”
ASX action already taken
Mr Stevens continued: “ASX has undertaken a range of actions since November to help address issues arising from last year’s outage. This includes the work already underway to review our operating model. The aim is to ensure ASX’s structure best reflects our strategic priorities, better aligns management roles, enhances management responsibility and accountability, and sharpens our focus on customers.”
Mr Stevens said: “We have re-aligned our teams under four business areas – Markets, Technology and Data, Securities and Payments, and Listings. Under this new structure the former equity trading business now reports to Helen Lofthouse as part of our new Markets division, sitting beside our derivatives trading business. The executives running the four business lines all report directly to me as CEO, with clearer accountability for services, operations and projects within their businesses.
“An important part of the new structure is the creation of an expanded Customer function run by Val Mathews. This aims to improve the end-to-end experience for customers by bringing together our customer- facing operations, communications, marketing, digital and program delivery activities.”
The revised leadership team for these areas comprises:
- Helen Lofthouse – Group Executive, Markets
- Dan Chesterman – Group Executive, Technology and Data
- Val Mathews – Chief Customer and Operations Officer
- Timothy Hogben – Group Executive, Securities and Payments
- Max Cunningham – Group Executive, Listings.In addition to changes in management, ASX has also taken steps to enhance our project delivery and execution practices. Since the outage ASX has:
- Refined and improved our working practices for new service releases with Nasdaq
- Engaged external specialists to improve our quality assurance and testing capabilities
- Aligned our Project Risk Management and Enterprise Risk Management frameworks more closely
- Enhanced the ASX Delivery Framework to improve consistency in our approach to delivering projects
- Reviewed the assurance plan for the CHESS replacement project covering project governance andfunctional and non-functional project objectives, including testing, project risk and issues management.
The importance of operational resilience at ASX
Mr Stevens continued: “ASX takes the resilience and reliability of its markets extremely seriously. That’s why we immediately engaged with our regulators to commission this external review and will address all of its recommendations. It’s also why we’ve already taken action to change our project delivery practices. The changes we’ve made to our management structure are aligned to these objectives.
“Driving technological change is hard and creates transition risk. No market will operate without incidents or outages from time to time. Nevertheless, all outages are regrettable.
“Since 2016, ASX has strengthened its risk and incident management, technology governance and enterprise architecture. In addition, we have substantially increased our investment in upgrading and modernising our technology. As a result, resilience has improved significantly. On a six-month rolling average, the number of customer-impacting incidents has dropped by 87%. There has also been a material reduction in outages. The progress we have made in reducing incidents and outages over the past five years validates our approach.
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