The Australian Securities Exchange (ASX) has decided to terminate its long-delayed blockchain-based post-trade network project, resulting in a financial write-off of approximately A$250 million.
Since 2017, the ASX has partnered with DLT specialist Digital Asset to develop a blockchain platform intended to replace the Chess post-trade settlement system. The project, originally slated for launch in April 2021, has faced numerous delays.
In August, ASX engaged Accenture to assess the project. The consulting firm delivered a critical evaluation, highlighting issues related to system complexity, application readiness, and vendor management.
ASX Chairman Damian Roche stated, “We have concluded that the path we were on will not meet ASX’s and the market’s high standards. There are significant technology, governance, and delivery challenges that must be addressed.”
The ASX plans to write off between A$245 million and A$255 million, pre-tax, related to this initiative. Additionally, the exchange may need to compensate trading firms that have reportedly spent around A$100 million to upgrade their systems in anticipation of the new network.
The exchange emphasized the need for further planning to evaluate alternatives to the Chess system, clarifying that the existing system “remains secure and stable, and is performing well.”
Joe Longo, chair of the Australian Securities and Investments Commission (ASIC), expressed concern over the timing of the findings in the Accenture report, stating, “That these findings can be made at this late stage of a critical replacement program is altogether unsatisfactory.” He added that regulators are closely monitoring ASX’s ongoing management of clearing and settlement under its licenses to ensure that the current Chess system maintains the requisite level of service, reliability, and resilience. Regulatory bodies will utilize the full range of options to ensure compliance.