- ASX ended its blockchain-based CHESS post-trade system project after six years and wrote off $164 million in costs.
- ASX sold its shares in project developer Digital Asset, earning a 20% profit and receiving $37 million from unnamed buyers.
- Digital Asset has attracted $315 million in total funding from major firms, including Accenture, Citi, Goldman Sachs, and IBM.
- Accenture’s review found the CHESS project only 63% ready and criticized both project management and high blockchain usage.
- The failures led to regulatory investigations and a formal inquiry into ASX regarding its governance and risk management.
The Australian Securities Exchange (ASX) stopped development on its blockchain-based replacement for the CHESS post-trade system in late 2022 after six years of work. The project ended following a change in leadership at ASX and left the exchange with a $164 million write-off.
In addition, ASX invested $30.9 million in project developer Digital Asset between 2016 and 2019. On Friday, ASX announced the sale of its Digital Asset shares. The transaction brought in $37 million, amounting to about a 20% profit. The buyers were not named.
Digital Asset has secured total investments of $315 million. Its backers include well-known organizations such as Accenture, Citi, Goldman Sachs, IBM, and JP Morgan. Despite the setback with ASX, Digital Asset has launched other successful projects. These include platforms for the Deutsche Börse’s D7 system and a solution for the Hong Kong Stock Exchange (HKEX). The company’s technology, called DAML and Canton, is also used by banks for issuing digital bonds and by Broadridge for processing large-scale repo transactions. The Versana syndicated loan platform, which uses DAML, manages $3.5 trillion in notional loan commitments.
An Accenture review indicated the CHESS project was only 63% complete and highlighted issues in project management between ASX and Digital Asset. The review reported that too much of the software relied on blockchain technology. However, it complimented the code’s quality.
Following the project’s collapse, ASX faced sharp criticism regarding its management and governance. The Australian regulator ASIC initiated legal action, alleging that ASX made inaccurate statements about the project’s progress—claiming it was “progressing well” in early 2022, shortly before confirming delays. After another outage in the older CHESS system in December, ASIC launched a formal inquiry into ASX. The investigation focuses on “governance, capability and risk management” due to what ASIC called “repeated and serious failures at ASX.”
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