The current system, the “Clearing House Electronic Subregister System”(CHESS) which has been used by ASX since the 1990’s, will be replaced with blockchain technology possibly in 2020.
The idea of using distributed ledger technology has been in the pipeline since 2015, but it was only recently in December of last year that the Australian stock exchange felt ready to announce that it would become the world’s first stock exchange to use the technology for post-trade settlement. The technology was developed in partnership with Digital Asset, led by former JPMorgan Chase executive Blythe Masters.
Chess was scheduled for an upgraded prior to ASX considering adopting DLT, so the exchange views the switch to the new system as a “marginal cost” according to ASX chief Dominic Stevens. Speaking at the end of last year, Stevens commented, “The costs in rolling out this system I don’t think are too dissimilar to us having rolled out a traditional system.”
“The CHESS system’s been around since the ’90s,” said Gareth James, an analyst at Morningstar Inc. “Imagine if you’re using any software on your PC from the ’90s,” suggesting that the system was well overdue for an update.
CLS Group CEO David Puth claims that ASX’s embracing of distributed ledger technology will be significant in that will provide an example, by “demystifying” DLT for others considering implementing blockchain across the sector, arguing that the move will, “…establish standards by itself.”
As blockchain is increasingly being developed and employed in new sectors across the country, cryptocurrency is increasing in popularity. While Australia may not be the largest market for Bitcoin and other digital currencies, it is one that is quickly growing. It is currently ranked the 13th in the world for Bitcoin trading volume by currency, with the AUD seeing around BTC 276 trading via the AUD in a 24-hour period. Comparatively, it is not uncommon for Japan to process BTC 301,404 in the same period.