ASX to replace post-trade systems with Digital Asset technology

Evarado Alatorre
Diciembre 8, 2017

The Australian Securities Exchange (ASX) is to turn to the distributed ledger technology to underpin its new system when it upgrades CHESS, the current ageing technology that it uses.

The Australian Securities Exchange (ASX) has confirmed that blockchain technology will replace its existing clearing and settlement system, becoming the world's first major stock exchange to do so.

It dates back to the 1990s and is now still in use by the exchange. A properly implemented blockchain provides a cryptographically secure transaction history that can provably show the transfer of digital assets using a tamper-proof, third-party auditable ledger.

ASX has conducted several demonstrations and workshops over the last two years, which it said confirmed confidence in the "functional, capacity, security and resilience capabilities of Digital Asset's application of DLT". ASX said it is now taking the opportunity to replace CHESS with a next generation post-trade platform using contemporary technology that makes an important statement of embracing change to the rest of the world.

It also expected to announce the vendor responsible for the platform by March 2018, when it was going to determine if the blockchain was the right solution. It will also give ASX's customers choice as to how they use ASX's post-trade services.

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ASX's media release further explained, "Today's decision follows the successful build of enterprise-grade DLT software for core equity clearing and settlement functions, and the completion of extensive suitability testing by ASX and DA over the past two years". "Together, we look forward to continuing to work with the industry as we finalise the requirements and the roadmap for implementation of the new system".

He added not all participants will migrate at once as a transition period and its full functionality is to be finalised in consultation with stakeholders; feedback is due by the end of March 2018.

"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", Masters said.

The trial saw ANZ and Westpac, in partnership with IBM and shopping centre operator Scentre Group, digitise the bank guarantee process used for commercial property leasing using the blockchain.

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