The Australian Securities and Investments Commission (ASIC) has launched legal action against the Australian Securities Exchange (ASX) over its failed Distributed Ledger Technology (DLT) project. The project, aimed at replacing the exchange’s CHESS settlement system, was halted in November 2022 after the ASX had invested more than USD 169 million. The ASX subsequently wrote off the investment.
The lawsuit centres around allegations that the ASX made misleading statements regarding the project’s progress. On 10 February 2022, the ASX announced that the project was “on track for go-live” in April 2023 and was “progressing well.” However, by March 2022, the ASX acknowledged potential delays.
“We allege that the true state of affairs as of 10 February 2022 was that the project was not ‘progressing well,’ contrary to ASX’s announcement,” said ASIC Chair Joe Longo. He added that the project’s delay and eventual suspension in November 2022 caused significant costs for both the ASX and market participants who had relied on the exchange’s assurances.
CHESS
Following Helen Lofthouse’s appointment as ASX CEO on 1 August 2022, Accenture was brought in to review the CHESS project. The consultancy’s November report revealed that only 63 per cent of the project was complete, raising concerns about the complexity of the architecture and the collaboration between ASX and DLT firm Digital Asset. Accenture recommended off-chain programming rather than relying heavily on DAML smart contracts.
After abandoning the project, the ASX has since restarted efforts with Tata Consultancy Services’ BaNCS solution and Accenture.
