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IBM finds that ASX outage is due to business platform not ready for go live

The Australian Securities Exchange (ASX) experienced “software glitches” when it went live with the refresh of its trading stock platform in November last year, forcing the exchange to suspend trading. trades.

At the time, the exchange said its technology provider Nasdaq, as well as independent specialist clients and third parties, performed extensive testing for more than a year on the ASX Trade system, including four dress rehearsals, in view of its sending into nature.

The technology used, he said, was the latest generation of a trading system developed by the Nasdaq and used around the world.

Following the blackout, the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) requested an independent review, and ASX saw fit to turn this responsibility over to IBM.

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On Monday, IBM made 17 recommendations to ASX and discovered a number of shortcomings in the project, including noting that the business platform was not ready for commissioning.

“Factors that suggested the ASX Trade system was not ready to go into service given ASX’s almost zero appetite for downtime. This was the case even though the formal implementation readiness processes were completed and verified by multiple parties with no objection to go live, ”IBM found.

“There were gaps in the rigor applied to the risk management process and expected project delivery issues for a project of this nature, and the risk and issue management, project compliance with ASX practices, requirements of the project and the test strategy / planning of the project have not been accepted industry practice.

“It was not reasonable to expect that the test plan used would satisfy ASX’s almost zero appetite for downtime.”

According to Big Blue, seven factors suggested the platform was not ready for go live, including historical software product quality metrics, additional testing needs noted, quantity of open defects, gaps in end-to-end test coverage. , the proximity of the freeze windows to year-end changes for participants, the risk probability ratings, and the lack of evidence of challenges to the risk rating or commissioning.

“Last November’s market blackout did not meet ASX’s high standards,” ASX CEO Dominic Stevens said on Monday. “We thought the software was ready for commissioning, as was our technology provider Nasdaq. There were clearly some issues, which was particularly disappointing given the significant progress we’ve made on resilience in recent years. “

IBM also concluded that the project could have benefited from additional and independent review.

He determined that there were gaps in the rigor applied to the risk management process and issues with project delivery, such as opportunities to identify additional missed risks, differences in delivery risk models project and enterprise delivery risk processes, with the project not receiving risk resources with greater technical project experience from which it could have benefited and governance being transferred to a group that had a wide range of responsibilities.

“The change diluted the focus on the project,” IBM said.

The review did find some bright spots, however, with IBM claiming that the ASX met or exceeded industry leading practices in 58 of 75 of the capabilities assessed.

“We acknowledge the findings of the report. It is fortunate that the ASX has met or exceeded industry leading practices in most areas. But the report highlights some important areas for improvement and we will respond to any of its recommendations.” , Stevens added.

“ASX is well advanced in developing a detailed response plan to be executed over the next 12-18 months, and we will be asking the independent expert to review our actions to respond to his recommendations. Our execution of this work program will be under the supervision of ASIC and RBA. “

IBM said developing the business case for the project and managing project change was beyond accepted practices; that the project had and had access to sufficient financial, time, human and technological resources at all stages of implementation to achieve its objectives; that communications with key stakeholders were appropriately managed by the ASX; and that the incident management actions taken by the exchange were appropriate.

In 2018, the exchange was asked to strengthen its risk management practices following an “unprecedented” hardware failure in September 2016 which led to the crash of its stock market. According to ASIC, the actions taken by ASX in the 2020 incident were appropriate and reflected lessons learned from the 2016 incident.

“ASX takes the resilience and reliability of its markets very seriously. That is why we have immediately contacted our regulators to order this external review and we will act on all of its recommendations. It’s also why we’ve already taken steps to change our project delivery practices, “Stevens continued.

“The changes we have made to our management structure are aligned with these goals.

“Driving technological change is difficult and creates a risk of transition. No market will function without incidents or outages from time to time. Nevertheless, all the failures are regrettable. “

Regulators expect ASX to apply information from IBM’s findings across the exchange to ensure that existing and proposed projects, including the CHESS replacement program, are managed and implemented. appropriately.

ASIC is also undertaking a separate investigation into the ASX Trade outage to determine whether ASX has fulfilled its obligations under its Australian Market License.

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