The Australian Securities Exchange (ASX) has been showing interest in using blockchain technology in the country’s financial system. Currently, the ASX uses Clearing House Electronic Subregister System (CHESS) for settlement of the financial products traded on its platform.

Announcing its half-year results to 31 December 2015, the ASX announced that it will develop solutions for Australia’s post-trade equity environment using distributed ledger technology. It has selected blockchain startup Digital Asset Holdings as its business partner for this initiative and recently invested $14.9 million in the company’s latest funding round.

Initial Phase and Staffing

"The initial development will take place over the next six to 12 months and will bring to life the benefits and implications of a new post-trade solution for the Australian equity market. The development will take place alongside CHESS, which will continue to operate as normal,” ASX said.

The stock exchange and Digital Assets will engage with regulators and government agencies to ensure that any future post-trade solution is in accordance with the country’s high regulatory, operational and security standards.

“We believe that distributed ledger technology has the potential to change the way our market operates end-to-end, reduce risk and costs for our clients, speed-up the settlement process for investors, and support new services for listed companies”, said Elmer Funke Kupper, ASX Managing Director and CEO.

ASX also said that that the staffing levels will grow in the second half and into FY17 as it increases resources to develop its data business, support Asian sales and expedite the design of a new blockchain-based post-trade solution for the country’s equity market.

Final Decision

ASX expects a final decision on the future market design to be reached by mid-2017, which will include a decision on the future of CHESS.

“ASX’s approach balances the interests of ASX clients, issuers, end-investors and regulators and is focused on the long-term future and competitiveness of Australia’s equity market”, the stock exchange said. “It allows all parties to engage fully in the innovation process over the next 18 months and build a positive understanding of the benefits and policy implications of a new solution.”