The latest announcement by ASX to have its equity markets settlement and clearing system based on a next gen blockchain-inspired technology has come as a surprise to the market to some extent, and may lay down a different perspective on the foundation technology that will help it gaining traction towards global exchanges and technology industry.
On this front, ASX joined hands with a New York start-up, Digital Asset Holdings, run by Blythe Masters, which has been engaged for developing the technology. Primarily, the group aims to replace its old CHESS system (Clearing House Electronic Subregister System) with a new one using distributed ledger technology (DLT). The duo has completed the extensive suitability testing over the past two years.
While the schedule and plan of going ahead with the transformation has not been clearly indicated, ASX has signalled that it might take some time to achieve the objectives pivoting on the above key announcement.
Nonetheless, the key aspect to note is that the distributed ledger technology is based on a blockchain phenomenon that is expected to operate through a single source of the true state of the ledger without having dependency of transactions to be confirmed by an external network of computers, and without access barriers to non-affiliated market operators and clearing and settlement facilities. This will avert the need of reconciling records in a central system and saving of costs in an attempt to have better operating efficiencies. Further, customers would be able to develop new services while reducing costs. Through the benefits highlighted, ASX visions Australia to be positioned at the forefront of innovation in financial markets.
ASX is said to have a stake in Digital Asset Holdings.
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