ASX finally makes its move and swaps CHESS for blockchain

Lloyd Doyle
December 7, 2017

The Australian Securities Exchange (ASX) has announced plans to replace Clearing House Electronic Subregister System (CHESS) using distributed ledger technology (DLT) developed by Digital Asset.

Over the past year, the ASX conducted industry-wide consultation, including quarterly webinars with over 150 participants; performed demonstrations of the blockchain-based technology to 110 companies from global finance companies; held a series of engagement workshops; and arranged six business committee meetings to prepare the DLT solution.

SIX, the Swiss stock exchange operator, also wants to make use of the blockchain technology and hired Masters to help it develop the use of Blockchain.

The ASX has been consulting on this decision for more than a year, and two years building and testing a prototype with Digital Asset, of which it owns 8.5 per cent, that could work at scale.

The CHESS system is used by the ASX to record shareholdings and manage the clearing and settlement of equity transactions publicly listed in Australia. It does this while maintaining confidentiality and scalability - both critical for market infrastructures.

It will now work with its stakeholders to finalise the scope of the go-live functionality of the new system, and will continue to consult with the market throughout 2018.

Chess was scheduled to be upgraded even before the exchange had considered blockchain, said Dominic Stevens, ASX's chief executive officer.

Day 1 transition is scheduled for late March in 2018. It operates as a decentralised, public ledger of every transaction made, with transactions verified and shared by a global network of computers.

"We support the ASX's commitment to designing a system that does not raise barriers to access for non-affiliated market operators and clearing and settlement facilities", he said in a statement.

'It will also give ASX customers choice as to how they use ASX's post-trade services, ' the ASX said. In early 2016, it selected Digital Asset to replace CHESS with a next-generation post-trade platform using cutting-edge technology.

Treasurer Scott Morrison said the roll out is consistent with the Government's agenda to put Australia at the forefront of financial technology and efficient financial markets.

"While we have a lot more work still to do, today's announcement is a major milestone on that journey".

Other reports by Iphone Fresh

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