Australian Stock Exchange sacks 200 contractors working on canceled blockchain project

The Australian Securities Exchange (ASX) is set to ax nearly 200 contractors who worked on incorporating blockchain technology into the CHESS clearing and settlement system.

The news comes after the ASX announced the demise of the seven-year project earlier this month, and the company wrote down a $170 million pre-tax loss as a result.

ASX CHESS (Clearing House Electronic Subregister System) has been in operation for around 25 years and manages the settlement of equity transactions and registers equity entries across the daily trading volume of around $3.19 billion.

The company had planned for the blockchain renewal to give both issuers and end investors “greater control over and increased confidence in” the stock exchange’s market activities, and provide better access to the holder register for those who issue securities.

An independent audit by consulting firm Accenture revealed a myriad of issues affecting the project, including latency and technical limitations surrounding the API, as well as challenges related to “achieving scalability, robustness and supportability.”

The blockchain project, which began in 2017, had been plagued by delays throughout its lifetime, and its completion was most recently pushed back until the end of 2024.

Although most of the external staff assigned to the project would have been affected by the decision, the ASX was told Reuters that it has retained 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 transition to other roles within the company.

At its peak, the project had a total of 300 people working on it, around 75% of whom would have been independent contractors.

Despite the issues involved in the effort 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 projects and mainstream adoption

Blockchain adoption at larger firms has been hit.

The ASX’s move is not the only shutter of a major blockchain project the industry has experienced in recent weeks.

IBM and shipping giant Maersk announced that they were shutting down TradeLensa project aimed at digitizing the global shipping ecosystem, which is now set to close its doors in late 2023.

While the Australian stock exchange may have dropped its blockchain ambitions, at least for now, other exchanges around the world may soon begin piloting comparable technology.

In September, the European Securities and Markets Agency (ESMA) unveiled plans to begin trialling the trading of securities such as stocks and bonds on digital ledgers using distributed ledger technology (DLT).