[LINK] itN: 'ASX axes blockchain-based core replacement'
Roger.Clarke at xamax.com.au
Thu Nov 17 17:29:41 AEDT 2022
[ Most of this article is smokescreen/waffle. The key bits are:
> ASX has axed the blockchain-based system [intended to] underpin CHESS2
> “We began this project with the latest information available at that
time, ... ” ASX chairman Damian Roche said in a statement.
[ Nothing in the media release appears to suggest incompetence in the
performance of the design and implementation (e.g. no sackings, no talk
off a lawsuit against a consultant or contractor).
[ So everything speaks for very, very belated discovery that blockchain
is just another data-structure, and one that is of direct relevance to a
very small number categories of real-world system. (The only really
good example I've ever found is 'old system title', which is a very
small market these days, especially in Oz).
[ In short, this particular bubble is bursting. (Plenty more to come).
[ Who's the local expert on tracking back through:
(a) Gartner's hype-cycle versions and where Blockchain sat when?
(b) Gartner's own hype on the magic of blockchain?
[ If only Roche or his execs had read what a range of people were
writing more than 6 years ago, including Steven Wilson and myself:
http://www.rogerclarke.com/EC/BCD.html (Feb 2016, rev. Sep 2016)
ASX axes blockchain-based core replacement
Goes back to solution design after results of Accenture audit.
Nov 17 2022
The Australian Securities Exchange (ASX) has axed the blockchain-based
system it had hoped would underpin its CHESS core system replacement,
and will head back to the drawing board.
The exchange said that between its own experience with the Digital
Asset-built system so far, and a review by Accenture, it had drawn the
conclusion that the system would not meet its needs.
All “current activities” on the core replacement project have been
paused to allow the ASX to “revisit” the solution design.
The decision means a “$245-255 million pre-tax ($172-179 million after
tax)” write-off for its first half results, but the ASX said it would
have “no impact on dividends.”
It's not clear if this also includes "significant" industry-incurred
costs associated with the core replacement.
“We began this project with the latest information available at that
time, determined to deliver the Australian market a post-trade solution
that balanced innovation and state of the art technology with safety and
reliability,” ASX chairman Damian Roche said in a statement.
“However, after further review, including consideration of the findings
of [an] independent review, we have concluded that the path we were on
will not meet ASX’s and the market’s high standards.
“There are significant technology, governance and delivery challenges
that must be addressed.”
Roche said the decision to discontinue work on the Digital Asset-based
CHESS replacement had “not been made lightly”.
The review by Accenture was called in August after go-live for the
blockchain-based CHESS replacement was delayed by a further 18 months to
CHESS stands for clearing house electronic subregister system. It
underpins all trades and settlements on the exchange.
ASX said the existing CHESS system “remains stable and secure” and would
now receive some extra investment “in its capacity and resilience”.
The exchange said it remained committed “to providing the best long-term
clearing and settlement solution for the Australian financial market.”
That also means it remains committed to ultimately finding a replacement
for the current CHESS.
“A project director with extensive technology transformation experience
has been appointed for the next phase of the CHESS replacement project,”
Managing director and CEO Helen Lofthouse said the replacement remains
“a large and complex undertaking.”
Lofthouse said Accenture’s findings “provide valuable inputs to helping
us determine a revised solution.”
“We have some work to do before updating and consulting with
stakeholders more deeply,” she said.
“In the meantime, our priority is continuing to maintain the stability
of the existing CHESS system, which underpins the smooth operation of
our financial markets.”
ASX’s program delivery capabilities criticised
The Australian Securities and Investments Commission (ASIC) and the
Reserve Bank of Australia (RBA) said the ASX’s move “marks a significant
setback to the replacement of critical national infrastructure for
Australia’s cash equity markets”.
Moreover, it is a black mark on the ASX’s internal “program delivery
capabilities”, and the two overseers voiced their displeasure at the
findings of the Accenture report.
“The independent report has found significant gaps and deficiencies in
ASX’s program delivery capabilities and that there are significant
challenges in the technology design,” ASIC chair Joe Longo said.
“That these findings can be made at this late stage of a critical
replacement program is altogether unsatisfactory.
“The ASX has failed to demonstrate appropriate control of the program to
date, and this has undermined legitimate expectations that the ASX can
deliver a world-class, contemporary financial market infrastructure.”
Both the RBA and ASIC have jointly set “expectations” on the ASX for
future program delivery capabilities, and for the continuation of the
Reserve Bank governor Philip Lowe said the ASX would need to work hard
to restore industry “confidence” in its ability to execute the core
“That requires, once the solution design is complete, a delivery plan,
including a highly credible, hard go-live date,” he said.
“The regulators expect the ASX to actively consult industry throughout
this process to ensure there is market confidence in its selected
implementation option, delivery plan and timeline.
“The regulators will engage with industry directly to make sure their
perspectives are given appropriate consideration by ASX.”
Roger Clarke mailto:Roger.Clarke at xamax.com.au
T: +61 2 6288 6916 http://www.xamax.com.au http://www.rogerclarke.com
Xamax Consultancy Pty Ltd 78 Sidaway St, Chapman ACT 2611 AUSTRALIA
Visiting Professor in the Faculty of Law University of N.S.W.
Visiting Professor in Computer Science Australian National University
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