What went wrong with the ASX blockchain landmark?
The Australian Securities Exchange took a leap of faith in commissioning Digital Asset to build a blockchain replacement for its clearing and settlement engine five years ago – perhaps too big a leap. Here, Digital Asset’s CEO explains what went wrong and what was learned.
It was supposed to be a game changer, the great step forward in the use of blockchain technology that would elevate it from a clever but nebulous idea to the heart of real-world financial markets.
After two years of study, the Australian Securities Exchange appointed a company in 2017 called Digital Asset Holdings to build a distributed-ledger system to replace the ASX’s 25-year-old clearing and settlement systems, called Chess (Clearing House Electronic Subregister System).
Five years on, plenty of examples of blockchain technology exist in stock exchanges – at Deutsche Börse, for example, or Switzerland’s SIX Digital Exchange – but back then it was seen as highly ambitious and attempting something on a greater scale of complexity than either of those examples.
Too complex, it turned out.
After multiple delays, in August Accenture was commissioned to look into the state of the project. The consultant’s report identified problems from timelines to communication to complexity, and suggested that its implementation, which the ASX had indicated as near-ready, was no more than 63% complete.
In the aftermath, in November, the ASX halted the project and said it would write off as much as A$255 million ($173 million) in technology costs. A parliamentary committee has followed and questions have been raised about the ASX’s culture, governance and technology capability.