ASX looks to distributed ledger technology

With blockchain technology, payments can be transmitted around the world faster and cheaper than ever. The Australian Securities Exchange (ASX) has now opened a new equities clearing and settlement system based on the technology. The new platform is called the Customer Development Environment (CDE).

The ASX is looking to upgrade its system for some time now. The original deadline to open up the blockchain system was during a weekend in 2020. However, it appears as though the launch has been delayed for an additional six months, with a tentative launch of March 2021.

The system would replace the Clearing House Electronic Subregister System (CHESS), an electronic clearing and settlement system that has been in place for decades. Under the current CHESS system, a settlement takes place two days after the trade (T+2, in financial terms).

This is not the first time that ASX has shown an interest in blockchain technology. It made a strategic investment in Digital Asset Holdings in 2016, a company that’s had investments from a dozen other financial services firms.

ASX also plans on improving overall functionality with seven “drops” of software code. The CDE platform is not fully functional right now, but is expected to be by mid-2019.

Cliff Richards, ASX’s Executive General Manager Equity Post-Trade Services, pointed out that this is part of the overall strategy to replace the CHESS system, stating: “Delivering the development environment for customers on schedule is a major step forward in ASX’s CHESS replacement journey.” He also noted distributed ledger technology is not the only improvement that ASX is interested in. Richards elaborated:

“While we believe distributed ledger technology offers exciting opportunities for the whole market to innovate, there is much still to do. We continue to work closely with our customers as we progress towards delivery of the new system.”

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