The Australian Securities Exchange (ASX) – one of the top ten securities exchanges in the world – will replace its registry, settlement and clearing system with blockchain technology to cut costs for customers, according to a press release.
The Australian Securities Exchange (ASX) has announced its intention to replace CHESS (Clearing House Electronic Subregister System) with distributed ledger technology (DLT, also known as blockchain technology) developed by its technology partner Digital Asset (DA).
“CHESS was world-leading when introduced in the 1990s, providing name-on-register functionality, electronic communications and removing paper share certificates. It continues to be a robust and reliable system. ASX is now taking the opportunity to replace CHESS with a next generation post-trade platform using contemporary technology,” the press release reads.
The decision to implement blockchain technology follows the completion of extensive suitability testing by ASX and DA over the past two years.
“ASX has been carefully examining distributed ledger technology for almost two-and-a-half years, including the last two years with Digital Asset, in order to understand its potential application. Having completed this work, we believe that using DLT to replace CHESS will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets,” ASX Managing Director and CEO Dominic Stevens said.
The Australian Securities Exchange expects to release a timetable for the blockchain technology transition in March 2018. The move will make ASX one of the biggest mainstream financial markets to operate on blockchain.
“After so much hype surrounding distributed ledger technology, today’s announcement delivers the first meaningful proof that the technology can live up to its potential. Together, DA and our client ASX have shown that the technology not only works, but can meet the requirements of mission critical financial infrastructure,” Digital Asset CEO Blythe Masters said.
The Australian Securities Exchange is the global leader in A$ and NZ$ financial markets, one of the top 10 securities exchanges in the world and the largest interest rate derivatives market in Asia.
ASX blockchain transition – Image source: AFP