ASX roasted by RBA, ASIC after blockchain project abandoned

Reserve Bank governor Philip Lowe said the announcement “after many years of investment from both the ASX and the industry is very disappointing. The ASX must prioritize developing a new plan to deliver safe and reliable clearing and settlement infrastructure.”

The stock market operator has experienced several delays with the system 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.

The write-off does not prevent ASX from using any of the technology developed, the company said.

This could play a factor in determining whether any compensation is needed for business partners who have made significant investments in the blockchain strategy, Lofthouse said.

“We’re going to be very mindful of the investments they’ve made,” she said, flagging the most likely compensation mechanism.

“We certainly have gone through rebate processes, from time to time, to address important customer concerns.”

Lofthouse was not concerned about the threat of regulatory intervention from ASIC or the RBA.

“What we do matters and we run critical market infrastructure and our regulators rightly have high expectations of us and that’s entirely appropriate,” she said.

“And we certainly want to continue to work with them and engage really constructively with them going forward.”

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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.

ASX deputy chairman Peter Hiom was originally responsible for the project. He retired in 2020 after 23 years with the company.

The ASX stock fell as much as 3 per cent this morning to a low of $69.

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