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. The CHESS platform has been in place since the 1990s.
The ASX announced in June 2016 that it was building a new post-trade solution using blockchain technology, asking for market feedback.
Blythe Masters, CEO of Digital Asset, said: "After so much hype surrounding distributed ledger technology, today's announcement delivers the first meaningful proof that the technology can live up to its potential".
The decision follows two years of testing and development, and represents a milestone in development of DLT.
"The testing confirms ASX's confidence in the functional, capacity, security, and resilience capabilities of [Digital Asset's] application of DLT to meet the needs of Australia's financial marketplace and maintain the highest regulatory and operational standards", the statement explains. The network will be permissioned (private) and the system will be designed without access barriers to non-affiliated market operators and clearing and settlement facilities.
The ASX said previously that the new CHESS trading platform will provide 24-hour OTC clearing and OTC client clearing enhancements that it expects will provide "contemporary" technology and additional functionality.
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The platform developed by Digital Asset uses the technology in order to allow the mutualization of financial market data and processes across multiple market participants. I am very grateful for their input and support.
The testing included two independent third-party security reviews of Digital Asset's technology, the ASX said.
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.
DLT, mate? "Yes, please", says the Australian Securities Exchange.
Treasurer Scott Morrison said the roll out is consistent with the Government's agenda to put Australia at the forefront of financial technology and efficient financial markets. "It supports the Turnbull Government's clear commitment to improving the global competitiveness of Australia's financial markets and the efficiency of our financial sector".