Australian stock exchange abandons plans to rebuild its platform on blockchain

In context: Blockchain technology has often been described as a solution in search of a problem. Blockchain will certainly not be a solution for the Australian stock market, as the market controlling company has decided to pursue alternative update paths for its platform.

The Australian Securities Exchange (ASX) Ltd has recently confirmed that a proposed plan to rebuild its software platform on a blockchain solution is no more. The “Blockchain revolution” has once again been postponed, at least Down Under, although the need for a radical software upgrade remains.

In November 2022, the ASX said it was halting the planned blockchain-based rebuild of the software system that currently manages all-in-one trading, settlement and clearing operations. The company made the decision after an external review confirmed that the system had to be rewritten from scratch. At that point, the new decentralized, cryptographically verified network system had already been in development for seven years.

The ASX still uses its 30-year-old software to manage the average daily turnover (A$4.685 billion) and total market capitalization (A$1.6 trillion) of one of the world’s top 20 exchange groups. According to a recording of a recent meeting with companies involved in the upgrade project, the ASX is now considering different options for a new rebuild attempt while completely discarding the “distributed ledger technology” of the blockchain.

Australian Exchange director Tim Whiteley said the second rebuilding attempt would have to use “a more conventional technology” than the revolutionary one originally proposed. To achieve the “business outcomes,” Whiteley said, the blockchain must be left to its own sad, protracted death.

Digital Asset, the company hired by the ASX to rebuild the Australian exchange software platform in 2016, did not comment on the new development. The New York-based organization is now apparently designing a new upgrade strategy that will be announced by the end of 2023.

Meanwhile, the ASX is seeking new ideas and potentially new business partners. The company has sent a request for information to other software vendors, and it has even sent a “request for proposal” (RFP) to some of those vendors for more detailed feedback on their proposal. Whiteley also said the ASX was receiving feedback from market participants, as no one appeared to be interested in a “risky one-date transition to new software” anymore.