ASX Limited (ASX) has selected Digital Asset Holdings, LLC to develop solutions for the Australian market by utilizing Distributed Ledger Technology, according to an ASX statement.
The development will be based on the implementation of Distributed Ledger Technology, which will aim to simplify and speed-up post-trade processing for Australian market participants. For ASX clients, this is important as it can help mitigate risk and reduce back-office administration and compliance costs. Additionally, the ASX will also look to target faster settlement of equity transactions for investors.
The adoption of Distributed Ledger Technology will also look to kindle greater innovation by ASX, in essence creating a more competitive marketplace across a broad spectrum of services.
Currently, ASX is one of twelve other global financial services groups that have made minority investment in Digital Asset, a US-based firm. ASX also paid $10.5 million (A$14.9 million) to acquire a 5% equity interest in Digital Asset, which will fund an initial phase of development.
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Back in February 2015, ASX also reported that it would replace or upgrade all of its main trading and post- trade platforms. This goes hand in hand with its investment in Digital Asset, and Phase 1 of the program will run to the end of 2016, whereby replacing ASX’s existing trading and risk management systems.
In addition, Phase 2 will focus on ASX’s post-trade services, including clearing and settlement of the cash equities market. The system that presently provides the clearing and settlement services to the Australian equity market is known as CHESS, however ASX will work with Digital Asset to create and implement a new post-trade solution for the Australian equity market.
The new development will take place alongside CHESS – ultimately, this will allow all stakeholders to assess the benefits and implications before a final decision is made on Australia’s post-trade technology in 2017.
According to Blythe Masters, Chief Executive Officer (CEO) of Digital Asset, in a recent statement on the development phase: “The initial phase of work is designed to bring the benefits to life and to test if Distributed Ledger Technology can work at the scale of the Australian equity market.”
“By building a solution alongside the existing CHESS system, all stakeholders can participate fully in the innovation process and have confidence in the clearing and settlement processes that underpin one of the top 10 equity markets in the world,” she added.