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The comments from former ASX chair Damian Roche reflect the initial optimism and the eventual realization of the insurmountable challenges faced during the development of the original CHESS replacement project with Digital Asset. His statement, “We began this project with the latest information available at that time, determined to deliver the Australian market a post-trade solution that balanced innovation and state of the art technology with safety and reliability,” highlights the ASX’s original ambition to modernize its core clearing and settlement infrastructure using cutting-edge distributed ledger technology.
However, the subsequent admission, “However, after further review, including consideration of the findings of the independent review, we have concluded that the path we were on will not meet ASX’s and the market’s high standards. There are significant technology, governance and delivery challenges that must be addressed,” underscores the severity of the issues that plagued the initial endeavor. This candid acknowledgment led to the decision to abandon the blockchain-based solution and pivot to an alternative strategy.
More recently, the ASX has provided an updated financial outlook for the new, phased CHESS replacement project. The significant costs associated with this critical infrastructure upgrade are now more clearly defined:
* Release 1 (Clearing services): Estimated to cost between $105 million and $125 million. This phase focuses on the clearing functionalities and is designed to be a more contained, less disruptive rollout.
* Release 2 (Settlement and subregister services): This more extensive phase carries a projected cost of up to $320 million. This release will encompass the core settlement and sub-register functions, along with enhancements like improved corporate action functionality.
ASX chief executive Helen Lofthouse, speaking at a recent Investor Forum, provided an update on the progress of this revised five-year roadmap, which was initially laid out in 2023. Her remarks indicate that the project is now progressing more positively, with “several milestones” having been met. A significant achievement mentioned is the opening of the first industry test environment for Release 1 in February, suggesting that the development and testing phases are underway and engaging market participants.
This update from Helen Lofthouse offers a more reassuring tone compared to the previous difficulties, indicating that the ASX is now on a more stable path for delivering the long-awaited CHESS replacement. The focus has shifted from the ambitious, but ultimately unsuccessful, DLT-based innovation to a more traditional, phased approach, prioritizing safety, reliability, and deliverability.

Video courtesy of CSOB

Video courtesy of CSOB