The Australian Securities Exchange has announced that it will no longer be going forward with its much-anticipated CHESS replacement project.
The project sought to replace the exchange’s 25 year-old Clearing House Electronic Subregister System (CHESS), which is primarily used to manage transactions and keep track of shareholdings.
5 years in the making
The plan, which was supposed to go live back in 2020, had been five years in the making and would’ve meant a great deal for the broader crypto-industry in terms of mainstream adoption. The exchange has been experimenting with distributed ledger technology (DLT) for the same too.
Consultancy giant Accenture carried out a comprehensive review of this replacement project after it missed multiple deadlines. The report found some key issues in it. This ultimately led to the Australian Securities Exchange abandoning the whole upgrade.
According to Accenture’s report, the identified issues were divided among 3 main categories, namely, Application Readiness, Solution Complexity, and Project Governance.
As the first name suggests, the software was estimated to be 63% complete with multiple elements yet to be tested. Secondly, the report identified complexity in the integrated solution design which compromised security, scalability, and stability for clearing and settlement of transactions.
Finally, Accenture identified several vendor management issues.
“The report observes a number of inefficiencies in the delivery lifecycle through to testing, with siloed execution and reporting resulting in misaligned views of status on delivery progress, risks and issues.”
Helen Lofthouse, Managing Director and CEO of Australian Securities Exchange said,
“Replacing CHESS is a large and complex undertaking. While ASX is keen to embrace technology that benefits the market, it’s clear we need to revisit the solution design as well as validate and test the feedback from the independent review to assess changes required to bring the project to market safely, efficiently and for the long-term.”
Move draws criticism from fellow financial entities
In a joint statement released soon after this announcement, the Australian Securities Investment Commission (ASIC) and the Reserve Bank of Australia (RBA) criticized the exchange’s decision to scrap this ambitious blockchain project.
Philip Lowe, the Governor of Australia’s central bank, described this turn of events as “disappointing,” citing the significant amount of capital invested in this project over the years – Close to $170 million.
Meanwhile, ASIC chairman Joe Longo has accused the exchange of failing to demonstrate control over the project.