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Is ASX dropping DLT from CHESS or limiting its role?

asx australian securities exchange

Last year the Australian Securities Exchange (ASX) paused its A$250m (US$166m) DLT-based CHESS replacement solution for clearing and settlement developed since 2016. It also wrote off the entirety of the investment and appointed a new project manager Tim Whiteley who was expected to reduce the dependence on DLT. In a webinar on Wednesday, Whiteley gave an update on the new CHESS replacement project and his comments left room for ambiguity regarding DLT.

Asked if the new replacement would go down a more conventional route, without the focus on blockchain, Whiteley responded, “While we continue to explore all the options, certainly we will need to use more conventional technology than in the original solution (DLT/blockchain) in order to achieve the business outcomes.”

This has been widely interpreted as DLT being dropped entirely, although it could just mean that DLT will no longer be at the core of the solution. We requested clarification which resulted in a similar answer. The response reiterated that ASX continues to explore all options. “As part of that, we are considering more conventional tech,” said a spokesperson.

When the pause was announced, ASX CEO Helen Lofthouse stated that it might use elements of the DLT solution that had already been built.

The pause followed an Accenture report on the DLT CHESS solution. It questioned why the Daml smart contract language was used for the entire business workflow instead of using it strategically. Given that the ASX is the sole arbiter of what gets logged on the ledger, it argued that much of the business workflow could be implemented off-ledger. 

The plans for the new solution and the partners contracted will be announced by the end of 2023.

While the original CHESS replacement project was to have a big bang go-live date, the next iteration will be deployed in phases. In February, ASX announced a A$70 million partnership program to incentivize industry cooperation after companies spent significant time testing the DLT solution.

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