The Australian Securities Exchange (ASX) is set to cut nearly 200 contractors who worked on integrating blockchain technology into its CHESS clearing and settlement system.
The news comes after the ASX announcement the demise of its seven-year-old project earlier this month, resulting in the company posting a pre-tax loss of $170 million.
The ASX CHESS (Clearing House Electronic Subregister System) has been in operation for approximately 25 years and handles the settlement of equity trades and registers holdings on the approximately $3.19 billion in daily trading volume it handles.
The company planned for the blockchain overhaul to give issuers and end investors “greater control and confidence in” the exchange’s market activities, providing greater access to the register of holders for those who issue securities.
An independent audit by consultancy Accenture revealed a myriad of issues impacting the project, including latency and technical constraints surrounding its API, as well as challenges with “scalability, resiliency and supportability.” charge”.
The blockchain project, which began in 2017, had experienced delays throughout its lifespan, and its completion was recently pushed back until the end of 2024.
Although most external personnel assigned to the project were impacted by the decision, ASX said Reuters that it kept a minority of the third-party contractors working on the project, some of whom have to work on a formal project review or move on to other roles within the company.
At its peak, the project had a total of 300 people working on it, about 75% of whom were reportedly independent contractors.
Despite issues with efforts to reinvent the CHESS system, an ASX spokesperson said in a statement that the current CHESS infrastructure “remains secure and stable, and works well.”
Blockchain projects and mainstream adoption
Adoption of blockchain in large enterprises has been hit or miss.
ASX’s move isn’t the only shutdown of a major blockchain project the industry has seen in recent weeks.
IBM and shipping giant Maersk announced that they were closing TradeLensa project to digitize the global shipping ecosystem, which is now expected to close at the end of 2023.
Although the Australian exchange may have given up on its blockchain aspirations, at least for now, other exchanges around the world may soon start piloting comparable technology.
In September, the European Securities and Markets Agency (ESMA) plans unveiled to begin testing trading in securities such as stocks and bonds on digital ledgers using distributed ledger technology (DLT).
