Australian Stock Exchange cancels launch of blockchain settlement platform

The Australian Stock Exchange (ASX) has been developing a blockchain replacement for its CHESS clearing system for several years now. However, the project was abandoned.

Plans to create a replacement for CHESS were announced back in 2017. But it looks like development the blockchain settlement system turned out to be much more laborious than expected. Testing and implementation of the new system was delayed several times and was due to be launched in 2023. Now it was decided to completely abandon the project. Development costs were about $170 million.

“ASX will re-evaluate all aspects of the CHESS replacement project after completion of an independent review by Accenture and its own audit department. The decision was made to halt the development of software to replace CHESS due to uncertainty about the timing and features of the solution. As a result, A$245-255 million in the first quarter of 2023 will be written off as a loss. This will not affect dividends, the ASX said in a press release.

Initially, it was assumed that the new system "combines innovation and advanced technology with safety and reliability." However, the analysis of the developed solution showed that it "does not meet the high standards of the market and ASX." Representatives of the exchange emphasized that the blockchain solution has problems with both the technology stack and management.

“The ASX announcement after years of investment from the exchange and the industry is disappointing. ASX should prioritize developing a new plan to build a secure and reliable clearing and settlement infrastructure,” said Reserve Bank of Australia Governor Philip Lowe.

Please note that exchanges around the world are exploring the possibilities of blockchain to create clearing platforms. The development of such platforms was announced by the Tel Aviv Stock Exchange, and the Nigerian Stock Exchange plans to launch a system on the blockchain as early as next year.