ASX Weighing Blockchain Transition Over Legacy Chess System

ASX's executive committee hinted at a December decision in its latest shareholder meeting.

The Australian Securities Exchange’s (ASX) legacy post-trade infrastructure could be in line for an upgrade. Leading executives at the exchange are weighing options for its Chess system, eyeing a platform based on distributed ledger technology that could potentially be decided as early as December.

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Exchange venues are gradually coming around to blockchain-based platforms, given several inherent advantages associated with its structure. In addition to helping curb counterparty risks, distributed ledger technology has also helped lower transaction costs while simultaneously improving transparency measures.

The latest decision point at ASX will be over the future structure and subsequent dismantling of its Chess system in favor of a new blockchain-based platform, powered by technology from US-based Digital Asset Holdings. ASX chairman Rick Holliday-Smith pointed to December in a recent annual general meeting for shareholders.

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He commented: “We are increasingly confident that this technology will help simplify how our marketplace works and should unlock a new era of efficiency and innovation.”

Viewing Gallery At The Australian Securities Exchange
Bloomberg

A potential transition would hardly be seismic for ASX, given that the exchange operator had already been testing Digital Asset’s technology in tandem with the routine running of Chess over a year. Back in June 2016, ASX also paid over $7.0 million to increase its stake in the US startup, and now holds an 8.5 percent share.

ASX CEO Dominic Stevens was also warming to the prospect of a more blockchain-centric future at the exchange venue. “All this ensures that ASX will be the best informed it can be about the specifications needed for new post-trade infrastructure for the equities market,” he noted at the shareholder meeting.

According to Mr. Stevens: “It is a big undertaking, and I am pleased with our progress and the potential of distributed ledger technology to deliver real efficiency gains for the market. We are on track to make an announcement about our assessment of its suitability to replace Chess in December 2017.”

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