Blockchain Scores Triumph as ASX Adopts DLT to Replace CHESS

The ASX is replacing its CHESS share clearing system with blockchain technology

ASX Says Yes: Securities Exchange Approves DLT Replacement of Post-Trade System

The testing included two independent third-party security reviews of Digital Asset's technology, the ASX said.

The Australian Securities Exchange (ASX) has become the first major bourse to announce the adoption of blockchain technology-the same kind of tech that underpins the bitcoin cryptocurrency-to record shareholdings and manage the clearing and settlement of equity transactions. Come January 2016, the ASX paid AUD14.9 million for a 5% equity stake in blockchain-startup Digital Asset Holdings, the latter which went on to develop ASX's newly adopted blockchain solution. In a statement on its website the ASX said it would provide more detail in March 2018 about the timing for the move and the functionality of the system at its launch.

Australia's main stock exchange just announced one of the finance industry's biggest bets yet on blockchain.

Singapore also has a link to Masters as she was appointed to the key advisory panel set up by the Monetary Authority of Singapore. Having completed this work, we believe that using DLT to replace CHESS will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets.

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The new system will operate on a secure private network where participants are known, have permission to access, and must comply with ongoing and enforceable obligations. The system, which was developed by Digital Asset (DA), will replace the Clearing House Electronic Subregister System (CHESS). It also would give ASX customers choice over how they use its post-trade services.

"ASX has consulted extensively on the needs and priorities for replacing CHESS, including with customers, share registries, software vendors, other exchanges and industry associations".

The implementation of blockchain in clearing and settling can make transactions quicker, cheaper, and easier when compared to the traditional systems banks use that requires going through a middleman.

ASX bought a minority stake in US blockchain developer Digital Asset through a A$14.9 million ($11.27 million) investment in January past year, to design a new post-trade solution for the Australian equity market. "Together, Digital Asset and our client ASX have shown that the technology not only works, but can meet the requirements of mission critical financial infrastructure", said Digital Asset CEO Blythe Masters.

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