The Australian Stock Exchange has just laid off 200 people who worked on its blockchain project. After many delays and worries during its development, the latter has just been deleted.
A bitter failure
L’Australian Securities Exchange (ASX) is terminating the contract of 200 employees. These were working on implementation of blockchain technology in his CHESS system. CHESS is the Australian Stock Exchange’s clearing and settlement system.
THE ASX CHESS (Clearing House Electronic Subregister System) has been in operation for about 25 years and manages the settlement of stock transactions and records stakes of the approximately $3.19 billion in daily trading volume it handles. It is therefore the central element of the Australian Stock Exchange.
The ASX has just announced that it is ending this project which started more than 7 years ago. The loss due to this project is close to the 170 million dollars.
The company wanted to give issuers and investors “greater control and increased confidence in stock market activities” through the use of blockchain technology. The latter would have made it possible to provide better access in the register of holders for issuers of securities.
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Many problems and delays
An independent audit carried out by the consulting firm Accenture revealed a myriad problems affecting the project, including latency and technical constraints surrounding its API, as well as difficulties with “achieving scalability, resilience and supportability“. Also, it is not surprising that the project ends today.
This blockchain integration project has seen many delays throughout its development. Its finalization had recently been postponed to 2024 in view of the problems encountered.
Until then ASX had retained a minority of external employees still working on the project. At its height, the project required the work of 300 employees, including 75% were external collaborators.
Despite issues with efforts to reinvent the CHESS system, an ASX spokesperson said in a statement that the current CHESS infrastructure “stays safe and stable, and works well.”
The complicated road to blockchain adoption by companies!
The adoption of blockchain technology by large companies is not an easy task. Indeed, the ASX is not the only company to give up its project in connection with the blockchain.
Recently these are IBM and the shipping giant Maersk who ended their project TradeLens. The latter aimed to digitize the global shipping ecosystem. The CEO of Maersk says about this judgment:
TradeLens was founded on the bold vision to take a leap forward in the digitalization of the global supply chain as an open and neutral industry platform. Unfortunately, although we managed to develop a viable platform, the need for full global industry collaboration has not been met. As a result, TradeLens has not achieved the level of commercial viability necessary to continue operating and meeting financial expectations as an independent business.
Announced in 2018, this project will therefore stop at the end of 2023.
Although the Australian exchange has given up on its blockchain aspirations, at least for now, other stock exchanges in the world could soon begin to implement comparable technology.
In September, European Securities and Markets Agency (ESMA) unveiled plans to begin testing trading in securities such as stocks and bonds on digital ledgers using the Distributed Ledger Technology (DLT). As a reminder, blockchain is a subcategory of DLT (distributed ledger in French) technology.
The difference between DLT and blockchain (source: SICCAR)
Despite the failure of the Australian stock exchange, there is no doubt that many projects related to blockchain technology will continue to see the light of day. This innovation remains one of the most interesting of the market and has many relevant use cases !
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