The Australian Securities Exchange has delivered another slap in the face for all the urgers of the crypto world and its much vaunted – but, apparently, not very good – blockchain-distributed ledger system that was at the heart of the supposed new world for all things finance.
ASX revealed Thursday that has officially written off the long-awaited blockchain technology designed to replace its core CHESS trading service – at a cost of around $255 million.
Australian taxpayers will pick up a third of the cost, making the final after-tax loss for ASX and its shareholders in the range of $172 to $179 million.
This will be a ’non-cash cost’ even though the $255 million spent on the project is actual money spent with the cost being capitalised in the accounts of ASX Ltd as an ‘asset’.
The ASX revealed in an early morning statement on Thursday that it will now reassess all aspects of the CHESS replacement project following completion of an independent review, conducted by Accenture, and its own internal assessment.
That means the five-year program is dead, having never arrived and Australian investors will have to wait a few more years to get a modern trading system that works without the occasional outages we have seen in the last three years.
The costs incurred will be written off “in light of the solution uncertainty” (a nice way of saying, ‘we have no idea if it would have worked anyway’), resulting in a charge of $245 million to $255 million pre-tax for the December half year, ASX said.
“On behalf of ASX, I apologise for the disruption experienced in relation to the CHESS replacement project over a number of years,” said ASX chairman Damian Roche in Thursday’s statement.
“ASX always endeavours to act in the best interests of the market, and I thank our customers and other stakeholders for their patience and support. Today’s decision has been made by the ASX Limited and Clearing and Settlement Boards, and it has not been made lightly.”
The stock market operator has experienced years of delays with the upgrade, which was intended to improve its core trading services by using blockchain technology.
ASX chief executive Helen Lofthouse said replacing its CHESS trading platform was a large and complex undertaking, and it had become clear the company needed to revisit the solution design after an independent review found the current project lacking.
“The independent report, coupled with our own assessment work, confirms a number of significant challenges associated with aspects of the CHESS replacement project,” she said in the statement.
The write-off does not prevent the ASX from using some of the technology developed, the company said.
The ASX had been investing in the technology project since 2017 and the go-live date had been pushed back due to a range of factors including COVID-19, complaints from the industry about lack of consultation and technological setbacks.
Investors ignored the big loss (they had probably figured the blockchain idea was dead anyway) and the shares hardly moved – easing 0.1% to $71.
