Australian stock market operator, ASX, has abandoned its ambitious project to replace the legacy clearing and settlements system, CHESS, with a blockchain technology-based platform.
CHESS Is a 30-Year Old System
The decision to completely abandon the project was taken in a meeting on Wednesday, according to Reuters. The company will continue its work toward developing a CHESS replacement, but it will not involve blockchain or distributed ledger technology.
ASX's Project Director, Tim Whiteley, said in the meeting that the next attempt to develop a CHESS replacement would "go down the more conventional route, that is, without the focus on DLT (or) blockchain," adding "while we continue to explore all the options, certainly we will need to use a more conventional technology than in the original solution in order to achieve the business outcomes."
The exchange operator has already enhanced its eligibility criteria for its CHESS replacement Partnership Program, in which it allocated up to AU$ 70 million.
Replacing Legacy Infrastructure
ASX first announced its plans to replace the Clearing House Electronic Subregister System or CHESS with a blockchain-based system in 2016. The Aussie giant even hired a New York-based contractor Digital Asset to develop its CHESS replacement and took an ownership stake in the startup.
Initially, the new system was scheduled to be in place by 2021. However, that faced multiple delays. The earlier stance of ASX was to resurrect the blockchain-based project with a new strategy by the year-end, but now it has completely taken a new direction.
According to Whiteley, ASX's decision was fueled by the market feedback "into the implementation planning," as participants did not want a risky single-date changeover to new software.
CHESS is a 30-year-old system, and the replacement of this system with a blockchain-based system would be a significant use case of the technology behind cryptocurrencies. In late 2021, ASX said that its distributed ledger technology (DLT) as a Service platform, Synfini, was production ready. Developed on top of VMware Blockchain, the platform would be offered as a cloud service and will allow flexibility and scalability to ASX's customers as their usage grows.
This article was written by Arnab Shome at www.financemagnates.com.
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