ASIC Sues ASX Over Abandoned Blockchain Initiative
The Australian Securities and Investments Commission (ASIC) has taken legal action against ASX, a local stock exchange, in Federal Court, accusing it of making misleading and deceptive claims about its now-canceled initiative to upgrade its outdated systems using blockchain technology.
On August 14th, ASIC stated that the Australian Securities Exchange (ASX) misrepresented the status of its project to replace the Clearing House Electronic Subregister System (CHESS) trading platform. ASX had claimed that the project was on track for go-live in April 2023 and was progressing well, but ASIC contends that these statements were misleading.
 
Lack Of Progress
According to the regulator, the project was not adhering to the planned schedule when the aforementioned statements were issued in early February 2022, and that ASX had no reasonable basis to suggest that it would be completed by that time.
ASIC Chair Joe Longo remarked that the project was indeed not progressing well as of February 10th, 2022, contrary to what ASX said. He added that the current situation reflects a collective failure by the ASX Board and senior executives at the time. ASIC has yet to decide on the specific penalties it will pursue.
 
Change Of Plans
In response, ASX referenced a statement by Managing Director and CEO Helen Lofthouse, who acknowledged the significance and serious nature of these proceedings. Lofthouse stated that they fully cooperated with the investigation and are now carefully reviewing and considering the allegations.
The exchange initially planned to replace CHESS with blockchain technology, a plan which began in early 2016, aiming to update the system used for managing share transactions and holdings since the mid-1990s. After nearly two years, it opted for a distributed ledger technology-based system.
However, by November 2022, following five years of development, several delays, and an expenditure of $170 million, ASX decided to pause the project after consulting firm Accenture identified significant challenges with the solution design and its ability to meet the necessary requirements. The exchange eventually abandoned its blockchain initiative to consider more traditional solutions.
 
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