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Friday, January 27, 2023

Australian stock exchange drops its blockchain-related plans, leaves $170 million hole

The Australian Stock Exchange’s (ASX) long-awaited plan to use blockchain to bring its clearing and settlement system into the 21st century has been canceled,

In a statement dated 17 November, The ASX announced that it has ceased all ongoing activities of its “CHESS Replacement Project” following an independent review by technology consultants Accenture.which identified “significant challenges with the design of the solution and its ability to meet ASX requirements”, stating:

“Current project activities have been paused while ASX reviews the solution design.”

For the past five years, the ASX has been working on a distributed ledger technology (DLT) solution that will replace its Clearinghouse Electronic Sub-registration System (CHESS).25 years old, used to register shares and manage settlement of transactions.

The system was originally scheduled for a 2020 release, but the project has suffered several delays over the years, as ASX claimed it needed more time for testing.That there was uncertainty around COVID-19 and it needed more time in development, capability review and even more testing before deployment.

In their 47-page report’s findings, Accenture claimed that enterprise workflows were “not suited to a distributed environment,” that the DLT-based system was too complex, and that the completion timeline was uncertain.Even though the application software was over 60% complete.

ASX chairman Damien Roche apologized for the outage, saying there were “significant technology, governance and distribution challenges that needed to be addressed.”,

“It is clear that we need to redesign the solution,” said Helen Lofthouse, Managing Director and CEO of ASX. adding that “we need to work before updating and consult with stakeholders in more depth.”

The announcement drew criticism from the Australian Securities Investments Commission (ASIC) and the Reserve Bank of Australia (RBA). -the regulator of the financial markets and the country’s central bank, respectively-, who published a joint statement on the matter.

RBA governor Philip Lowe called the ASX announcement “very disappointing” and ASIC chairman Joe Longo said the ASX “has failed to demonstrate adequate control of the program to date”.And it has undermined legitimate expectations that the ASX can offer a contemporary and world-class financial markets infrastructure.”

Both organizations highlighted their expectations, He added that replacement of CHESS will be ongoing before the current system meets its requirements and that “continuity of the market and service must be guaranteed” by the current system.

The ASX should also “enhance its capabilities” and address the “serious deficiencies identified by the independent report”, starting with a plan to fix them.,

The ASX said the project had earned a pre-tax fee of between $164.6 million and $171.3 million. (between 245 and 255 million Australian dollars).

the explanation: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be construed as financial advice or investment recommendation. All investments and commercial dealings involve risk and it is the responsibility of each individual to conduct appropriate research before making any investment decision.

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