The decision by the Australian Securities Exchange (ASX) to use distributed ledger technology for its settlement and clearing system for equities transactions has been welcomed by industry association FinTech Australia.
Distributed ledger technology developed by Digital Asset will replace CHESS (Clearing House Electronic Subregister System), which ASX currently uses to record shareholdings and manage the clearing and settlement of equity transactions.
In a press release, the ASX stated that while CHESS was “world-leading when introduced in the 1990s” and “continues to be a robust and reliable system”, it was replacing the systems with “a next generation post-trade platform using contemporary technology”.
“ASX has been carefully examining distributed ledger technology for almost two-and-a-half years, including the last two years with Digital Asset, in order to understand its potential application,” said Dominic Stevens, ASX Managing Director and CEO. “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.”
Blythe Masters, Digital Asset CEO, added: “After so much hype surrounding distributed ledger technology, [this] announcement delivers the first meaningful proof that the technology can live up to its potential”.
FinTech Australia responded to ASX’s announcement, in the following comment provided to The Australian:
“When it comes to blockchain and distributed ledger technology, Australia is going beyond the hype and instead developing real solutions and governance for this technology. The ASX announcement is further evidence of this.
“We also expect the ASX decision to spur more investigations by larger corporate players to unlock the vast potential of this technology.
“Australia is taking a strong leadership position, creating a sound, globally applicable framework for this technology to thrive in new and existing businesses.
“For example, Standards Australia is developing international blockchain standards and the CSIRO’s Data61 released two reports in June 2017 on how blockchain based systems could be adopted across government and industry in Australia.
[Now], the Australian Senate [has] passed legislation extending anti-money laundering and counter-terrorism financing regulation to digital currency exchanges, which operate from blockchain platforms.
“Australia is understood to be one of only a handful of countries – one other being Japan – to have moved to make amendments to both its tax and anti-money laundering laws to recognise digital currencies.
“Australia is developing a compelling capability in distributed ledger technologies, as there is also a wide diversity of use cases being developed here.
“Alongside the ASX CHESS-replacement example, use cases are also being developed in areas such as agricultural supply chains, counterfeit food identification, peer-to-peer energy trading and the issuance of government and corporate bonds.”
See also: Let’s talk… Fintech and “Innovation will flourish” in the digital currency sector as anti-laundering laws pass.