AUSTRALIAN (Commonwealth Union)_The Australian Securities Exchange (ASX) has cancelled a seven-year-long initiative to use blockchain to scale up the exchange’s CHESS clearing and settlement system after an independent assessment by Accenture revealed flaws.
CHESS (Clearing House Electronic Subregister System) was established by ASX 25 years ago to process securities trade electronically. The project incurred a pre-tax loss of approximately $170 million ($255 million AUD), which the business has written off, according to ASX. “On behalf of ASX, I apologise for the interruption caused by the CHESS replacement project over the past several years,” said Damian Roche, Chairman of ASX. “Today’s decision was made with great care by the ASX Limited and Clearing and Settlement Boards.”
According to ASX data, the share price of ASX Limited closed today on the negative side, down 0.182%. Because CHESS is decades old, ASX sought to modernise it and began examining alternative possibilities in late 2015. By January 2016, ASX had chosen Digital Asset as its technology partner to create a similar system based on blockchain technology, with the project dubbed the “CHESS Replacement”.
The project was delayed due to a number of obstacles, including COVID-19. Accenture was invited to perform an impartial analysis of the CHESS Replacement project in September 2022. According to Accenture’s independent evaluation, “serious issues with the solution designs and its capacity to meet ASX’s requirements” exist.
The research highlights six key concerns, including latency and concurrency. Because ASX handles millions of transaction settlements per day, any latency (delay) will have an impact on its operations. The report also said that just 63% of the project has been completed. ASX states that “present project operations have been suspended while ASX revisits the solution design”. The current “CHESS remains secure, stable, and working well,” according to the business.
“Replacing CHESS is a massive and complex undertaking,” said ASX CEO Helen Lofthouse. “Several severe issues related with components of the CHESS replacement project are confirmed by the independent report and our assessment work.”
