ASX hasn't given up on blockchain

The Australian Securities Exchange (ASX) has not abandoned distributed ledger technology (DLT) as the foundation for its core replacement project, keeping it as an active option under consideration.

CIO Tim Whiteley told an ASX investor day that DLT - the technology behind blockchain - remained on the table as an option for the CHESS replacement.

CHESS is the clearing house electronic subregister system that underpins all trades and settlements on the exchange.

Work on the DLT-based CHESS replacement was discontinued at the end of last year owing to “significant technology, governance and delivery challenges”.

Reuters reported last month that a redesign of the CHESS replacement would not involve DLT, and would instead be based on “conventional” technology.

But Whiteley presented a different story at investor day, saying pointedly that “contrary to some headlines, no firm solution decision has been made.”

“We remain on track to announce a solution design in the last quarter of this calendar year and we continue to explore all options for the solution design,” he said.

“This work includes consideration of options in four areas. 

“Firstly we are looking at the previous DLT-based solution and considering ways we can change the existing solution to resolve the issues that were called out in the external report. 

“Second, we are assessing options to build a new solution using conventional technologies and architectures. 

“We’re also investigating the product-based option. For this option, we refreshed our view of the top 20 international exchanges to understand what software products they had in place. Following this we issued a request for information to appropriate product vendors to review all the options available to us, both locally and internationally. 

“And the fourth area is looking at our current CHESS system and how we could upgrade the existing technology stack and build out the functionality required for the CHESS replacement scope.”

The fourth option the ASX more or less has to do anyway: regulators want the existing CHESS system to be operational until 2032, regardless of what the replacement looks like.

That means a range of upgrades need to be made to CHESS in the next few years, and that is now being worked through.