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Blockchain powered stock market rebuild started in 2017 delayed again
COBOL and Itanium to keep the job well into 2023 – past original 2020 go-live date
The Australian Securities Exchange (ASX) is attempting to replace its core trading systems with a blockchain-powered alternative – an effort often touted as one of the world's most significant blockchain implementations. Unfortunately, the project has struck trouble, again.
The application in question is called "CHESS" – the Clearing House Electronic Subregister System. ASX trading data suggests it handles 39.7 million trades in an average month. The Register understands the platform was built in COBOL and runs on servers running the discontinued Itanium processors cooked up by HPE and Intel in the 1990s – a combination that saw the ASX announce a blockchain-based rebuild in 2017, with a planned go-live in 2021. That was subsequently revised to April 2022, then April 2023.
The ASX liked the idea of a blockchain-powered bourse because it would mean market participants could store their own copy of the distributed ledger that recorded the state of the market. Orders placed on participants' own systems would be mirrored across the network of participants, with all entries immutably recorded – just the way traders and regulators like it.
That vision has proven hard to realise.
A stakeholder communication [PDF] issued on Monday reveals "a strong likelihood of delay to the go-live date."
A delayed software update that adds features to the platform is the culprit. The stakeholder communication doesn't name the source of the delay, instead referring to "our technology provider". The Register understands that is a reference to Digital Asset – a startup that champions the Digital Asset Modelling Language (DAML) ASX is using on the project. VMware is also a key player in the project, with its blockchain used in the core app and its application packaging tech used to allow market participants to run and store their own copies of the ASX's distributed ledger.
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The stakeholder communication advises that the delayed update will mean planned work in April has been pushed to July. Subsequent rehearsals of cutover from the COBOL system to the new version of CHESS will not take place in October as planned.
"We are confident with the delivery, testing and industry participation to date," the communication reads. "However, we also recognise the complexity and risk management necessary for this type of project and the need for comprehensive industry testing, integration and operational readiness."
The platform itself – and blockchain – is said to be "performing well." That news will be well received by blockchain enthusiasts because the CHESS replacement project was one of the world's first substantial and mission-critical implementations of the technology in an environment that simply does not tolerate downtime or glitches. On the other hand, the delays show that Blockchain is no silver bullet for complex application buids.
Investors may not be tolerant of this delay. The ASX is listed on its own bourse, and its shares have dropped by over a dollar – about 1.5 per cent – since news of the CHESS replacement delay landed. ®