Australia’s stock market operator has decided to abandon its plans of rebuilding its software platform using blockchain technology, marking a significant rejection of the once-celebrated concept that gained prominence through its association with cryptocurrencies.
The Australian Securities Exchange (ASX) caused frustration among market participants in November when it decided to “pause” the rebuild of its comprehensive trading, settlement and clearing software based on decentralized computing. An external review concluded that after seven years of development, significant rework was necessary.
Following the initial pause, the company has indicated that it is exploring alternatives for a new attempt to rebuild its 30-year-old software. However, during a meeting with participants on May 17, it was reported that the company stated it would not incorporate blockchain or any related distributed ledger technology (DLT).
When asked about the approach for the next attempt, Tim Whiteley, the exchange project director, stated during the meeting that while they are exploring all options, they will likely need to use a more conventional technology instead of DLT or blockchain to achieve the desired business outcomes.
The statement indicates the conclusion of a project that was expected to showcase one of the most notable examples of a concept aimed at expediting online transactions through secure processing across multiple locations.
ASX was posed to be the world’s first securities exchange to adopt blockchain technology in the operation of its core services in partnership with the New York-based contractor Digital Asset, who is providing the technology. ASX bought a small stake in Digital Asset after hiring it to rebuild its software in 2016.
During the meeting, Whiteley informed participants that ASX was progressing towards finalizing a new strategy by the end of the year. He mentioned that the company had sent a request for information to potential software vendors and had also issued a request for proposal (RFP) to vendors who expressed a more positive interest, seeking more comprehensive feedback.
ASX received feedback from market participants expressing their preference for a less risky approach, avoiding a sudden transition to new software on a single date. Whiteley acknowledged that this feedback has been considered in the implementation planning process.