When I am trying to save a user story or bug I get the above "System: System is required." error. What is the cause for this?
If I try to edit a ticket, it works with no issue.
Your system has a custom field called "System", which has been set mandatory in your project's user stories and bugs. As it's not happening on edit, then it's a validator on "create"
You either need to enter it, or get your admins to change or remove the validator.
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