ASX offloads interest in Digital Asset

The Australian Securities Exchange (ASX) has sold its shareholding in Digital Asset Holdings, the firm it partnered with in 2016 to build the doomed CHESS replacement.

The sale price is approximately $57 million, with a pre-tax gain of about $42 million compared to ASX's current carrying value of the company and will be reflected in the ASX's FY25 financial results, it said.

The sale price represents a pre-tax gain of approximately $10 million on ASX's original acquisition cost.

The ASX did not disclose who the purchaser was.

The ASX acquired a stake in Digital Asset in 2016 as part of a partnership that allowed the platform to receive technology consultations including the improvement of its clearing and settlement system.

However, the agreement fell through due to various misalignments, leading to numerous delays before the CHESS replacement was indefinitely delayed in 2022.

The debacle also cost the ASX $255 million in derecognising all the capitalised software of Digital Asset.

"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," former ASX chair Damian Roche said at the time.

"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."

More recently, the ASX has revealed the cost of the CHESS Release 2 could be up to $320 million - while Release 1 will cost about $105 million and $125 million.

Speaking at the Investor Forum on Wednesday, ASX chief executive Helen Lofthouse provided an update on the five-year roadmap laid out in 2023, claiming the replacement project has met "several milestones", including opening the first industry test environment for Release 1 in February.

"It's pleasing to be at the stage in our strategy where we can show steady progress of key deliverables. This is particularly the case for our technology modernisation program and in the way we've been engaging with our customers and stakeholders," Lofthouse said.

"We still have a way to go, and there are areas such as operational risk and business resilience where we are redoubling our efforts and making further investment."