After seven years of development, Australian Securities Exchange (ASX) has finally abandoned plans to use blockchain technology or related distributed ledger technology (DLT) for revamping its existing Clearing House Electronic Subregister System (CHESS)
At a May 17 meeting, ASX exchange project director Tim Whiteley said that while the exchange continues to explore all the options, “certainly we will need to use a more conventional technology than in the original solution in order to achieve the business outcomes," Reuters reported Friday citing a recording of the meeting.
The ASX is Australia's largest stock exchange, boasting a market capitalization of more than $2.5 trillion with over 2,200 firms listed on the exchange.
The exchange expects to adopt a new strategy by the end of the year, with Whiteley telling the meeting participants the company had sent a request for information to potential software vendors and issued a request for a proposal to interested parties to get “more detailed feedback.”
ASX didn’t immediately respond to Decrypt’s request for comment.
ASX and blockchain
ASX first announced its intention to replace CHESS with a new blockchain-based system in 2016, with the decision driven by the potential benefits the technology would offer, including increased efficiency, reduced costs, improved security, and enhanced transparency.
The new system was being developed in partnership with New York-based Digital Asset Holdings, aiming to leverage a permissioned enterprise blockchain accessible only to approved participants.
The ASX's blockchain initiative has gone through extensive testing and development phases, including a successful prototype and a series of industry-wide consultations.
The project has faced some delays, with the expected launch date being pushed back multiple times before ASX announced it was pausing the overhaul of the CHESS system in November last year.
The decision came after an independent report conducted by Accenture identified “significant challenges with the solution designs and its ability to meet ASX’s requirements.”
Back then, ASX said that the now-abandoned blockchain initiative incurred a pre-tax loss of roughly $170 million (~$255 million AUD), which the company had written off.