The Australian Securities Exchange (ASX) is set to axe almost 200 contractors who were working on incorporating blockchain technology into its CHESS clearing and settlement system.
The news comes after ASX announced the demise of its seven-year-long project earlier this month, with the company writing down a $170 million pre-tax loss as a result.
The ASX CHESS (Clearing House Electronic Subregister System) has been operating for around 25 years and manages the settlement of share transactions and records shareholdings across the roughly $3.19 billion of daily trading volume it handles.
The company had planned for the blockchain revamp to give both issuers and end investors “greater control over, and enhanced confidence in” the exchange’s market activities, providing improved access to the register of holders for those issuing 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 relating to “achieving scalability, resiliency, and supportability.”
The blockchain project, which began in 2017, had been dogged by delays throughout its lifespan, and its completion was most recently pushed back until late 2024.
Though most of the external staff assigned to the project would have been impacted by the decision, ASX told Reuters that it has kept a minority of the third-party contractors working on the project, some of whom are set to work on a formal review of the project or move to other roles at the company.
At its peak, the project had a total of 300 people working on it, around 75% of which would have been independent contractors.
Despite the issues involved in efforts to reinvent the CHESS system, an ASX spokesperson said in a statement that the current CHESS infrastructure “remains secure and stable, and is performing well.”
Blockchain adoption at larger firms has been hit and miss.
ASX’s move isn’t the only shuttering of a major blockchain project the industry has experienced in the past weeks.
IBM and shipping giant Maersk announced they were shutting down TradeLens, a project aimed at digitizing the global shipping ecosystem, which is now set to shut its doors in late 2023.
Though the Australian stock exchange may have dropped its blockchain aspirations, at least for now, other stock exchanges worldwide may soon start piloting comparable technology.
In September, European Securities and Markets Agency (ESMA) unveiled plans to begin trialing the trading of securities such as stocks and bonds on digital ledgers using distributed ledger technology (DLT).