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The Australian Securities Exchange (ASX) has finalized the sale of its entire stake in Digital Asset Holdings, a move that marks a definitive end to their troubled partnership on the CHESS replacement project. This divestment, for approximately $57 million, generates a pre-tax gain of about $42 million for ASX, compared to the current book value, and a $10 million gain on its original investment. These financial benefits will be reflected in ASX’s FY25 results.
A Tumultuous Partnership and Project Failure:
The ASX’s involvement with Digital Asset began in 2016, with an initial investment of $14.9 million for a 5% shareholding, and a subsequent increase to 8.5% in June 2016. The partnership aimed to leverage Digital Asset’s distributed ledger technology (DLT), commonly known as blockchain, to modernize ASX’s critical Clearing House Electronic Subregister System (CHESS). CHESS, which has been in operation since 1994, handles the clearing, settlement, and sub-register services for Australia’s equity market.
However, the ambitious blockchain-based CHESS replacement project faced numerous delays, scope creep, and escalating costs. Despite significant investments and an initial target go-live date of April 2021, the project encountered fundamental technology, governance, and delivery challenges. In November 2022, after investing an estimated $255 million and taking a substantial write-down, the ASX officially abandoned the blockchain-based solution, citing that it would not meet the market’s high standards for scalability and resilience. This decision led to considerable scrutiny, including legal proceedings from the Australian Securities and Investments Commission (ASIC) alleging that ASX misled investors about the project’s progress.
The Path Forward for CHESS Replacement:
Following the abandonment of the blockchain-based solution, the ASX embarked on a revised CHESS replacement strategy. This new approach involves a modular, cloud-based platform to be developed by Tata Consultancy Services (TCS) using its TCS BaNCS Market Infrastructure product. The new project is planned for a phased rollout:
* Release 1 (Clearing services): Targeted for 2026, with estimated costs between $105 million and $125 million. This release aims to minimize disruption by maintaining existing CHESS message interfaces and business processes.
* Release 2 (Settlement and subregister services): Expected in 2029, with estimated costs ranging from $270 million to $320 million. This phase will also include improved corporate action functionality.
The ASX has emphasized its commitment to the safe and reliable delivery of the new CHESS system. The long timeline for Release 2 is intended to allow ample time for industry preparation and readiness activities. There are also ongoing discussions and consultations about a potential transition to a T+1 settlement cycle (settlement within one business day) in Australia, though the ASX currently proposes this would occur after the full implementation of CHESS Release 2, likely no earlier than 2030.
The sale of its stake in Digital Asset marks a clear break from the past for the ASX and its modernization efforts, allowing it to fully focus on the new, multi-phased approach to replacing the critical CHESS system.

Video courtesy of Eurex

Video courtesy of Eurex