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The Australian Stock Exchange is by its own admission standing at the bleeding edge of innovation with a blockchain-based replacement for its post trade settlement system. The organisation last week released its industry consultation paper providing more detail about the new platform.
That gives important guidance for industry about when it needs to be ready, and the systems it will need to connect to the new platform now slated to go live late in or early in Developed in association with New York based Digital Asset, the ASX greenlighted the distributed ledger technology blockchain project late last year.
CHESS Clearing House Electronic Subregister System was developed in the early s, and was one of the first systems in the world able to dematerialise shares through digitisation. The blockchain system being constructed will have ASX host a central database, while exchange participants will take a node to that database, to confirm instantly that their records match those of the ASX.
But he also sees the new platform as an innovation engine for the entire financial sector in Australia. It allows technology to flourish on top of the platform. The consultation paper is the result of a year-long process involving six working groups that explored what the industry wanted from the new platform, before narrowing that down to the 50 business features that the industry most wanted. It outlines which of those features will be available on day one and acts as a roadmap to the future.
Mr Stevens says that once the platform is completed, it is envisaged there will be months of parallel running to iron out any bugs before CHESS is finally decommissioned.
Ultimately he suspects a similar blockchain based solution could be developed for the Austraclear bonds platform. This is the next stage of that. We have to create a new CHESS and our system is better than those around the world because it has a lot more information in it. Mr Stevens says the ASX decision to go with blockchain has also upped the innovation ante for the local offices of international finance companies which connect to the ASX. While both ASX and ASIC use sophisticated data analysis platforms designed to sniff out unusual trading patterns that might point to insider trading, Mr Stevens says the ASX is also interested in technology to make sense of market announcements and determine what is and what is not considered material.
That short cable ensures everyone has equal access and experiences the same latency which is critical for high speed trading. Technology companies with a good story to tell though will find a receptive local market he said. With more than technology companies listed on the ASX it is big enough to attract investor interest, but not so big that local companies get lost as they might on larger international exchanges according to Mr Stevens.
A great example is WiseTech. Powered by Hello Espresso. Submissions regarding the consultation paper are sought by 22 June. Upcoming Events Register Now. Cyber centres for Hobart, Darwin. More detail on science boost. Anger grows over crowdfund farce.