Australia's stock market operator has dropped plans to rebuild its software platform using blockchain technology, marking a major rejection of the once-famous concept that gained prominence alongside cryptocurrencies.
In November 2022, the Australian Securities Exchange (ASX) decided to "pause" rebuilding of its integrated trading, settlement and clearing software based on decentralized computing, much to the dismay of market participants. An external review concluded that a major rework was necessitated essary after seven years of development. After the initial pause, the company said it was exploring alternatives to try again to rebuild its 30-year-old software. However, in a meeting with participants on May 17, the company reportedly stated that it would not adopt blockchain or any related distributed ledger technology (DLT).
When asked what approach to try next, project director Tim Whiteley said during the meeting that while the exchange is exploring all options, it may need to use more traditional technologies to achieve the desired business outcomes. The announcement marks the end of a project that promises to showcase one of the most famous examples of a concept aimed at speeding up online transactions through secure processing across multiple locations.
The ASX is expected to become the first stock exchange in the world to adopt blockchain technology in its core service operations, in partnership with New York-based contractor Digital Asset, which provides the technology. ASX bought a small stake in Digital Asset after hiring it to rebuild its software in 2016. During the meeting, Whiteley informed attendees that the ASX was on track to finalize a new strategy by the end of the year. He mentioned that the company has sent requests for information to potential software vendors and requests for proposals to interested parties for more comprehensive feedback.
The ASX has received feedback from market participants expressing their preference for a less risky approach, avoiding an abrupt transition to new software on one date. Whiteley acknowledges that this feedback has been taken into account during the implementation planning process.
