ASX Finally Gives Blockchain Plans – ShareCafe
The Australian Stock Exchange has dealt another slap in the face to all the calls for the crypto world and its much-vaunted – but apparently not very good – blockchain distributed ledger system that was at the heart of the supposed new world of all things. finance.
The ASX revealed on Thursday that it has officially written off the long-awaited blockchain technology designed to replace its core CHESS trading service – at a cost of around $255 million.
Australian taxpayers will pick up a third of the cost, making the final after-tax loss for the ASX and its shareholders in the range of $172 to $179 million.
This will be a “non-cash cost”, although the $255 million spent on the project is actual money spent, while the cost is capitalized in the accounts of ASX Ltd as an “asset”.
The ASX revealed in an early morning statement on Thursday that it will now reassess all aspects of the CHESS replacement project following the completion of an independent review, carried out by Accenture, and its own internal assessment.
That means the five-year program is dead, never came and Australian investors will have to wait a few more years to get a modern trading system that works without the occasional disruptions we’ve seen over the past three years.
The costs incurred will be written off “in light of the solution uncertainty” (a fancy way of saying, ‘we have no idea if it would have worked anyway’), resulting in a pre-tax cost of $245 million to $255 million for the December half-year, said the ASX.
“On behalf of the ASX, I apologize for the disruption associated with the CHESS replacement project over several years,” ASX chairman Damian Roche said in Thursday’s statement.
“The ASX always tries to act in the best interests of the market and I thank our customers and other stakeholders for their patience and support. Today’s decision has been made by ASX Limited and the Clearing and Settlement Boards, and it has not been taken lightly.”
The stock market operator has experienced years of delays with the upgrade, which was meant to improve core trading services using blockchain technology.
ASX CEO Helen Lofthouse said replacing the CHESS trading platform was a large and complex task and it had become clear the company needed to overhaul the solution design after an independent review found the current project lacking.
“The independent report, combined with our own assessment work, confirms a number of significant challenges relating to aspects of the CHESS replacement project,” she said in the statement.
The write-off does not prevent ASX from using any of the technology developed, the company said.
The ASX had been investing in the technology project since 2017, and the start date had been pushed back due to a number of factors, including COVID-19, industry complaints about a lack of consultation and technology setbacks.
Investors ignored the big loss (they probably figured the blockchain idea was dead anyway) and the shares barely moved – down 0.1% to $71.
