ASX To Use Distributed Ledger Technology In Place Of CHESS

On Thursday, the Australian Securities Exchange (ASX) announced that it will use distributed ledger technology to record shareholdings and manage the clearing and settlement of equity transactions in Australia. The system, which was developed by Digital Asset (DA), will replace the Clearing House Electronic Subregister System (CHESS).

“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,” said ASX managing director and CEO Dominic Stevens. “While we have a lot more work still to do, today’s announcement is a major milestone on that journey.”

Blythe Masters, CEO of Digital Asset, noted, “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. Together, DA and our client ASX have shown that the technology not only works, but can meet the requirements of mission critical financial infrastructure.”

ASX’s media release further explained, “Today’s decision follows the successful build of enterprise-grade DLT software for core equity clearing and settlement functions, and the completion of extensive suitability testing by ASX and DA over the past two years.”

“The testing confirms ASX’s confidence in the functional, capacity, security and resilience capabilities of DA’s application of DLT to meet the needs of Australia’s financial marketplace and maintain the highest regulatory and operational standards. The testing included two independent third party security reviews of DA’s technology.”

ASX also added, “Day 1 functionality and the proposed timing for transition are expected to be released for market feedback at the end of March 2018.”

The DA system will be operated by ASX on a private, permissioned network.