Capital markets News

Australian Securities Exchange to delay blockchain launch by at least a year

ASX

Today the Australian Securities Exchange (ASX) opened a four-week consultation on delaying the launch of its blockchain settlement system by a year to April 2022. Back in March, the ASX said it would get feedback about pushing back the go-live because of the impact of COVID-19.

Share registrar Computershare, which has stated many times that it has antitrust concerns about the CHESS system encroaching on other businesses, is trying to lobby for a two year delay. The development of the CHESS platform triggered perhaps the first blockchain antitrust complaint.

“We are approaching an important and exciting phase of the project, involving close collaboration between ASX and CHESS users, as they test their systems and begin operational readiness activities,” said ASX Deputy CEO Peter Hiom. “In developing the revised implementation plan, ASX has been very mindful of the challenges the industry faces during the COVID-19 pandemic.”

But the accompanying document makes clear that COVID-19 is only one contributing factor in the delay. Others include additional features requested by customers, the ASX needs to do more readiness preparation, and the March 2020 crisis signaled a need for increased “performance requirements”.

In terms of performance, it’s worth noting that the ASX is the central clearer for the core CHESS functionality. Hence, for this application, the system does not require distributed blockchain consensus. 

The main technology partner is Digital Asset, in which the ASX has a significant investment. More recently, VMWare, a Digital Asset partner, joined the team and the solution now uses VMWare Blockchain with the DAML smart contract language.

The ASX started running proofs of concept in 2015 and formally announced the project would use distributed ledger technology in late 2017. Originally, the CHESS system was set to launch at the end of 2020. But in September 2018, the date was pushed back until March or April 2021.

The project is at an advanced stage, with 89% of the core clearing and settlement functionality deployed to the customer development environment (CDE). Thirty-four customers have connected to the CDE, including software providers, brokers and share registrars. The ASX also says it has successfully deployed the CHESS application and DLT to multiple ASX technology environments.