Jan 24 (Reuters) - Australia's corporate regulator said on Friday it was assessing all options for a regulatory response, after bourse operator ASX's ASX.AX clearing and settlement software CHESS broke down last month.

The Australian Securities and Investments Commission (ASIC) said it was deeply disappointed by the incident and the impact it had on the market.

"ASIC is engaging with the RBA (Reserve Bank of Australia) and stakeholders on the impact of the incident and lessons for the future," ASIC said in an emailed statement to Reuters.

ASX said on Thursday it will pay a rebate of A$1 million ($628,000.00) to traders affected by deferred settlements due to the CHESS (Clearing House Electronic Subregister System) outage on Dec. 20.

"ASIC is in regular contact with ASX and has underlined its expectations for the ongoing resilience, reliability, integrity, and security of CHESS," ASIC said.

ASX had been looking to replace the CHESS software using blockchain-based technology, but abandoned the overhaul in November 2022, six years after announcing it, citing concerns about the product's complexity and scalability.

It is currently facing a lawsuit from Australia's corporate regulator alleging it misled the public about the progress of a troubled software upgrade.

($1 = 1.5924 Australian dollars)

(Reporting by John Biju in Bengaluru; Editing by Rashmi Aich)

((John.Biju@thomsonreuters.com;))