The Australian Securities Exchange (ASX) announced today that it has delayed the expected launch of its distributed ledger technology (DLT) network, otherwise known as blockchain, which will replace the decades-old CHESS clearing and settlement system, by six months.
The announcement was included in the exchange operator’s response to its public consultation paper regarding its planned transition to a blockchain system. The consultation was originally published in April this year. At the time, ASX expected the new blockchain system would go live by the end of 2020.
Now, it is not expected to be operational until March or April of 2021. According to the report, this is because ASX received 41 written submissions from various stakeholders, with a number of them questioning whether the previous deadline was achievable.
Specifically, the report said: “While there was continued widespread support for delivering new scope on Day 1, respondents questioned whether the proposed implementation window of Q4 2020 to Q1 2021 was achievable given the significance of the technology change and the range of new scope being introduced.“
ACY Securities Supports ASIC’s Product Intervention OrderGo to article >>
Taking the responses into consideration, ASX has extended its user development and testing period for six months as well as its mandatory accreditation by the same period of time. It has also deferred the commencement of industry-wide testing by half a year.
The ASX reaffirmed in the report that it remains committed to a single cutover weekend from its core CHESS system. This is despite some parts of the industry wanting a more phased deployment approach.
ASX will also delay the launch of certain features
In the response, the Australian exchange operator also noted that respondents had a common view that there was too much new functionality being proposed to be added in such a short period of time. This would result in increased complexity and impact the implementation timeframe.
As a result of this feedback, ASX also announced that seven features of the new blockchain system that were initially planned to be included in the launch will instead be released at a later stage. This includes settlement in foreign currencies and a reporting feature that shows account balance information.
Whilst ASX has been looking into adopting new technologies since 2015, Finance Magnates reported in September last year that the exchange was considering changing its legacy post-trade infrastructure to a platform based on distributed ledger technology. The changes are part of an effort to cut operational costs and increase the efficiency of transactions.