14 Feb 2020 Arjun Agarwal
Australia’s Securities Exchange To Provide The First Industrial-Scale Blockchain Use Case
Australia’s Securities Exchange (ASX) is preparing an initiative to replace its current Clearing House Electronic Subregister System (CHESS) platform with a blockchain-based solution. CHESS has been in operation for over 25 years.
ASX CEO Dominic Stevens stated that the new project has already begun to gain traction, as worldwide investors are frequently asking about the new blockchain platform.
“We are trying to invest in long-term sustainability, as well as updating our operations and risk management strategies to cope up with the new business opportunities and technologies,” Stevens added during the review of the first half of financial 2020. Stevens also reported over AU$250 million in after-tax profits for ASX.
The new post-trade blockchain solution started as a plan in 2016, with ASX building the first industry-scale blockchain settlement protocol. In September 2019, the company announced it managed to complete the prototyping phase with success. However, the launch date is still not clarified, as various sources predict the mid-2020 or mid-2021 release date.
The distributed ledger technology (DLT)-based system would replace the veteran in settlement, CHESS. Cliff Richards, executive general manager of Equity Post-Trade Services at ASX, noted that such changes occur rather infrequently, as settlement protocols are a sector that sees fewer dynamics than other areas. However, with the introduction of DLT, and the lifespan of settlement protocols of around 10-20 years, the ASX team decided to go “all-in” on Blockchain.
ASX collaborated with U.S.-based company Digital Asset, to provide the know-how to the emerging enterprise opportunities for the new technology. Richards also noted that despite keeping at least 80% of the functionality of CHESS, the new possibilities for catching up with the ever-evolving financial markets is the key to making such a decision.
ASX CEO Dominic Stevens further clarified that the company would also invest in similar activities with a focus on customer value. The long-term investment, according to Stevens, would result in better enterprise risk management, and making the technology behind settlements contemporary.
In the meantime, ASX scheduled the launch of its All Technology index, dubbed XTX, for later in February. According to ASX CEO, the new index would enhance investment options in the Australian technology sector, as well as increase the understanding of Australia’s technology industry.
ASX also launched its DataSphere platform, which provides open data for analytics and machine learning. Customers can access ASX, as well as third-party data to find a solution to problems, and sell analysis and data. Currently, the platform is fully operational, with new blocks of data added every day. “To provide, clean, and curate such vast amounts of data is a hefty task, but we are certain that we would drive the project to its end phase,” Stevens added.
Nevertheless, ASX may face a massive problem with its external connectivity network, dubbed ASX Net. However, Stevens is confident that the upgrade would create a “standardized, consolidated, and faster communications channel across the entire banking industry.”
ASX is also stepping into the conveyance sector, providing similar services to SYMPLI in order to integrate banking with conveyance services throughout Australia.
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