“Current activity on the project has been put on hold while ASX revisits the design of the solution,” said ASX. “All stakeholder activity on the project will be suspended and industry test environments will be closed.”
ASX pulled out of plans to build a private blockchain after the collapse of cryptocurrency exchange FTX and the devaluation of various cryptocurrencies operated on blockchain technology. After a terrifying few weeks in
Accenture found that ASX application software being developed by ASX-owned Digital Asset is only 63% complete. I found the design of the system to be overly complex. This includes “including how the ASX requirements interact with the application and underlying ledger”.
ASX Chairman Damien Roche said: There are significant technology, governance, and delivery challenges that must be addressed.
“On behalf of ASX, I would like to apologize for the confusion we have experienced over the years related to the CHESS replacement project.”
ASX said it will establish an industry forum to provide input and receive regular status reports on the project as it decides what to do next.
After spending millions of dollars preparing to connect to the new system, stockbrokers across the market began assessing how much of their investments they needed to write off.
“These are the questions that people will explore today: what was spent and what is still available? Understand why ASX made this decision and what can be kept It’s a top priority.”
The Australian Securities and Investments Commission and the Reserve Bank, regulators of clearing and settlement markets, said the ASX decision “represented a significant setback to the replacement of national infrastructure critical to Australia’s cash equities market and currently undermines existing markets. We are focused on the survival of the chess platform”.
ASIC and RBA ensure that the current CHESS system is “supported and maintained to ensure its stability, resilience and longevity so that it can continue to serve the market reliably” ASX sent a joint letter to ASX expressing hope for They demanded that ASX improve its program delivery capabilities and that the CHESS replacement program “get back on track after the solution design is complete.”
“The announcement by ASX after years of investment by both ASX and the industry is very disappointing,” said Dr. Lowe. “ASX should prioritize developing new plans to provide a safe and reliable clearing and settlement infrastructure.”
return to the beginning
ASX selected Digital Asset Holdings to build the distributed ledger at the end of 2017 after beginning research into the technology in 2015. Blockchain considerations came amid great hype about the technology’s potential to create efficiencies in the marketplace by reducing the role of middlemen. .
Originally, it was scheduled to start live in April of last year. However, it was repeatedly remanded as it became clear that the system did not meet the needs of the market. This included not having enough throughput to settle trades.
The ASX struggled to deliver on its original intention of reducing the cost of market operations as the proposed technology struggled with interrelationships with disparate systems connecting payment and clearing systems. Existing registries and custody firms were concerned that ASX was using this technology to hijack their functions.
ASX will return to the drawing board to determine whether blockchain can continue to play a role in payments and clearing, or whether other forms of technology should be used. You are not developing a “Plan B” in parallel with your project.
ASX CEO Helen Lofthouse said:
“We will return to this with an open mind. We are looking for the best solution for the Australian market and will be broad and thoughtful in our analysis of our options.”
“For clarity, the derecognition costs reflect the uncertainty of the future value of our current solution design. It does not prevent you from using part of what you have already built if you decide that you can.
Companies looking to leverage market intelligence on distributed ledgers to innovate have expressed frustration at being stuck in legacy systems forever.
“This shows, belatedly, that in order to build a new technology platform, you have to be a technology company and have strong technology capabilities. This decision proves it,” said Paul Williams, CEO of Automic Group, which was developing the new registry service in the ASX test environment.
“So we are still operating on a 25-year-old platform that lacks automation, suffers from system outages, and has many inefficiencies. I feel disappointed that I have to.”
After being criticized by market participants for not having sufficient consultations with customers over the past few years, ASIC and RBA expect ASX to actively consult with industry throughout the new process. said. Delivery Plan and Timeline”.
The regulator said it will work directly with the brokerage industry to ensure that ASX takes their views into account.
ASIC Chairman Joe Longo said:
“The fact that these findings are available at this late stage of an important alternative program is far from satisfactory.”
“ASX has historically failed to demonstrate proper management of its programme.
ASX said former Westpac executive Tim Whiteley has been appointed project director for CHESS’s next-stage replacement, to strengthen his management expertise on large-scale projects. ASX will continue to invest in his existing CHESS system, which will eventually need to be replaced.
Lofthouse said Digital Asset, which developed the software, and VMWare, which built the distributed ledger, can continue to play a role in creating the revised system.
An independent report highlights “the scale and complexity of the CHESS replacement project,” ASX said. It identified “vendor management issues,” including how the ASX and Digital Assets teams operate and interact that “present challenges to project delivery.”
It came after a tough period for ASX, whose share price is down 23% this year. Increased regulatory and political scrutiny New leadership following the departure of former CEO Dominic Stevens and much of his senior leadership team. The ASX board also suffered its first strike at his AGM in September.
ASX shares fell 3% after trading for an hour at $69.08. ASX said the write-down is classified as a material item and will not affect the dividend.
In another ASX release on Thursday, ASX said it had revoked 72,283 rights. These were understood to have been held by Stevens and former Deputy CEO Peter Hiom, who was leading the CHESS replacement project. but departed in May 2021.