ASX sells stake in Canton developer Digital Asset – Ledger Insights – blockchain for enterprise
One of the highest profile projects involving blockchain was the Australian Securities Exchange’s (ASX) replacement of its entire post trade system, CHESS. But in late 2022 after six years of work and a change of ASX management, the stock exchange paused work before abandoning the initiative. It had spent A$250m ($164m), which was written off. ASX had also made separate equity investments in the project’s developer Digital Asset totaling A$47 million ($30.9m) through to 2019. On Friday the exchange announced it sold its Digital Asset stock at a roughly 20% profit for A$57m ($37m) to unnamed investors.
Digital Asset has raised a cumulative $315 million, with the most recent investment of $120 million coming in 2021 and a long list of blue chip backers. They include Accenture, Citi, Goldman Sachs, IBM, JP Morgan and many others.
While the failure of the CHESS project was a black mark for the blockchain developer, several other Digital Asset projects have successfully launched using its DAML and Canton technology. These include systems for at least two other stock exchanges, such as the Deutsche Börse’s D7 digital securities platform and a solution for HKEX. Multiple banks have used its technology, including the Goldman Sachs Digital Asset Platform (GS DAP) and HSBC’s Orion, which have both been used for high profile bond issuances. Broadridge operates an intraday repo platform that processes around $1.5 trillion monthly using DAML. Another Digital Asset solution is the bank owned syndicated loan platform Versana, which hosts $3.5 trillion in notional commitments.
The CHESS DLT fallout
But the fallout from ASX was ugly. Accenture was paid to review the work, concluding that the project was 63% ready. It had reservations about project management between ASX and Digital Asset, plus concerns about the complexity of the architecture. In its view, too high a proportion of the software used blockchain, although it praised the quality of the code.
The events also increased scrutiny of ASX, whose project management and governance were criticized. Last year the Australian regulator ASIC sued the exchange alleging it made inaccurate statements about the progress of the DLT project, including announcing that it was “progressing well” in February 2022 shortly before confirming a delay. Following another outage of the old CHESS system in December, these issues culminated in this morning’s ASIC announcement of a formal inquiry into the company regarding “governance, capability and risk management” because of “repeated and serious failures at ASX.”
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