The planned blockchain-backed upgrade has potentially cost Australia’s main exchange over $170 million
In a Nov. 17 statement, the Australian Securities Exchange (ASX) announced it had paused all current activities on its long-anticipated blockchain “CHESS replacement project”. The decision is based on an independent review from tech consulting firm Accenture, which identified “significant challenges with the solution design and its ability to meet ASX’s requirements”.
The primary national exchange has been working on a Distributed Ledger Technology solution for the last five years. It was supposed to substitute its legacy Clearing House Electronic Subregister System (CHESS), used for the last 25 years to record shareholdings and manage transaction settlements.
Initially, the innovative system was supposed to launch in 2020. However, multiple delays appeared due to Covid-19 uncertainties, capacity overhauls, additional testing, etc. Nevertheless, after all modifications, Accenture’s assessment of the solution was non-complimentary. The review discovered that business workflows were “not tailored for a distributed environment”, the DLT-based system was too complex, and the completion timeline was uncertain.
ASX chairman Damian Roche admitted, “there are significant technology, governance, and delivery challenges that must be addressed.” Therefore, the development is delayed for an indefinite period if not cancelled altogether until the exchange revisits the solution design and consults with stakeholders. The project has already been completed for 60%, costing about $170 million ($250 million AUD).
Both the Australian Securities Investment Commission (ASIC) and the Reserve Bank of Australia (RBA) criticised the institution for failing “to demonstrate appropriate control of the program to date, and this has undermined legitimate expectations that the ASX can deliver a world-class, contemporary financial market infrastructure.”