The exchange operator in Australia has decided not to rebuild its software platform using blockchain technology. This decision marks a striking change of direction from the once-celebrated concept that was closely associated with cryptocurrencies.
Pause software rebuild
In November 2022, the Australian Securities Exchange (ASX) sparked frustration among market participants when it decided to “pause” the rebuilding of its comprehensive trading, settlement and clearing software based on decentralized computers. After an external assessment, it was found that after 7 years of development, significantly more work was needed.
After the initial hiatus, the company has indicated that it is exploring alternatives for another attempt to rebuild its 30-year-old software. However, at a meeting with participants on May 17, it was announced that the company has stated that it will not use blockchain or related distributed ledger technology (DLT).
When asked about the approach for the next attempt, project director Tim Whiteley stated at the meeting that while the exchange is exploring all options, it will likely have to rely on more conventional technology to achieve the desired business outcomes.
The statement marks the completion of a project that is expected to be one of the most notable examples of a concept aimed at accelerating online transactions through secure, multi-site processing.
First stock exchange to adopt blockchain technology off the track
ASX was poised to become the world’s first stock exchange to adopt blockchain technology in its core services, partnering with New York-based contractor Digital Asset, who provided the technology. ASX had acquired a small stake in Digital Asset after the company was brought in to rebuild the software in 2016.
During the meeting, Whiteley informed the participants that ASX was making good progress towards finalizing a new strategy by the end of the year. He reported that the company had sent a request for information to potential software vendors and a request for proposals from interested parties to receive more extensive feedback.
ASX received feedback from market participants who preferred a less risky approach, avoiding an abrupt transition to new software on a specific date. Whiteley acknowledged that this feedback was considered in the implementation planning process.