ASX shareholders are preparing to sue former directors over the exchange's abandoned blockchain project, which was meant to replace the CHESS clearing system. The exchange has admitted it misled the market about the project's viability. The legal action adds to mounting governance questions at the Australian bourse.
The failed CHESS overhaul
The project was a blockchain-based overhaul of CHESS, the system that clears and settles trades on the ASX. It was meant to modernize Australia's market infrastructure, but it was scrapped after years of work. The failure has been a black mark on the exchange's reputation.
Admission of misleading the market
ASX has admitted it misled the market about the project's progress. That admission is central to the planned lawsuit, which argues former directors breached their duties. The shareholders' legal team says the directors knew the project was in trouble but didn't tell investors.
Governance scrutiny
The failure has renewed governance scrutiny of the exchange. Questions are being asked about how the project was managed and why it was allowed to continue for so long. The planned lawsuit is the latest in a series of governance challenges for the exchange.
The lawsuit is still in the planning stages, but it marks a new chapter in the fallout from the failed project.
