The Australian Securities Exchange (ASX) has signalled it will abandon plans to rebuild its core platforms on blockchain technology.
In 2017 the ASX decided to replace its core app, named CHESS, with a system based on blockchain and Digital Asset Modelling Language (DAML). The Exchange hoped to allow market participants to run their own nodes of a blockchain that would record their transactions, before rippling out over the blockchain so that all other stakeholders would also have a record of the transaction. This was billed as a modern way to run an exchange, instead of an old-fashioned central platform.
The plan drew enormous attention, and praise, from the blockchain community, which saw it as an endorsement of the tech’s suitability for the extremely demanding and sensitive job of running a significant securities exchange – and therefore for almost anything else.
But the project did not go well. In 2020 it was pushed back a year, then further delays led to a plan to go live in 2023.
In late 2022, the ASX paused the project after a review found that using blockchain tech wasn’t up to the job. An external review found poor vendor management and technology issues combined to derail the project.
As the ASX is a listed entity – on its own bourse! – this all played out in public in the form of continuous disclosure about the project’s woes.
In November 2022, just after the project was paused, it became the subject of an extraordinary blog post by former Amazon Web Services veep and distinguished engineer Tim Bray, who shared his experience of being asked by then AWS boss Andy Jassy to visit New York’s financial services industry to help the cloud giant develop a blockchain strategy.
Bray’s post details how, in multiple meetings on the trip, he could find little practical need or application for blockchain – but kept hearing that as the ASX was adopting the tech it had to be taken seriously.
AWS chose not to make a big blockchain play.
A year later, Bray wrote, Jassy again called for a discussion about AWS’s blockchain strategy, which was needed in part because the ASX was adopting the tech.
AWS stayed out, again, and contented itself with selling cloud services to other blockchain users.
Last week, the ASX staged a webinar to inform stakeholders of the state of the CHESS project.
In that session, ASX execs presented four options: fix the blockchain-based project; build an entirely new app; buy a commercial product; or iterate the current codebase.
In a Q&A session at the end of the webinar, execs were asked if blockchain was likely to be used in any of those options.
“Do you expect the new solution to go down a more conventional route, that is without the focus on DLT blockchain etc?”
Tim Whitely, ASX transformation project director, responded: “While we continue to explore all the options, we will need to use a more conventional technology than in the original solution in order to achieve the business outcomes.”
Which sounds an awful lot like the ASX is going to bin blockchain.
And by doing so, deprive the world of one of the most visible and demanding applications for which it was ever considered suitable. ®