The Australian Securities Exchange (ASX) has abandoned the blockchain settlement system it has been working on for years. The move follows a scathing report from Accenture that identified several problems with the system that will cost the exchange more than $160 million.
ASX has been working for more than six years to migrate its workflow and settlements to a system based on distributed ledger technology (DLT). He partnered with Digital Asset Holdings on an initiative to replace the outdated Clearing House Electronic Subregistry System (CHESS).
However, after six years and hundreds of millions of dollars, the exchange, the largest in Australia, curtailed the project.
“We started this project with the latest information available at the time, with the intention of providing the Australian market with a post-trade solution that combines innovation and advanced technology with safety and reliability,” said ASX Chairman Damian Roche. statement.
“However, after further analysis, including review of the findings in an independent report, we concluded that the path we were on would not meet the high standards of the ASX and the market,” he said.
The ASX chairman also apologized for “the failures that have occurred in connection with the CHESS replacement project over a number of years.”
CHESS is the system that ASX currently uses to manage the settlement of share trades. The exchange has been in need of an update to its system for some time now as securities trading continues to develop around the world.
In 2016, the company announced a partnership with Digital Asset Holdings, a New York-based blockchain technology firm, to upgrade CHESS to a DLT-based system. The partnership brought the tech firm into the spotlight and helped it raise hundreds of millions of dollars under its then-CEO Blythe Masters.
Since then, the project has faced a number of obstacles. This began with some companies in Australia resisting the joint registry, and relations between ASX and Digital Asset Holdings began to deteriorate over the following years. It ended up with Masters stepping down from her lead role, and things have gone awry ever since.
For ASX, Accenture’s independent report was the last straw. The report states that uncertain timelines, excessive complexity, and a vague connection to Digital Asset Holdings made the project a disastrous failure.
“The current CHESS remains safe and stable and performs well. ASX will continue to invest in its capacity and resilience,” the exchange said in an attempt to save face.
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