Australia bourse blockchain launch faces new delays

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The planned implementation of a blockchain-based system at the Australian Securities Exchange (ASX) may be pushed by up to two years. This is after some of the market participants voiced their concerns, claiming that the integration of the system would have far-reaching effects on the market.

The ASX announced in 2017 that it would replace the existing CHESS system with one built on the blockchain. CHESS is the system that the bourse uses to record shareholdings and manage the clearing and settlement of equities transactions.

The implementation of the blockchain system had been planned for April 2020. However, as CoinGeek reported, the coronavirus pandemic forced the bourse to postpone its integration plans. Now, this integration could be pushed back for up to two years if some of the market players have their way.

According to a report by the Financial Times, one of the largest share registrars in Australia is opposing the new system. Computershare is seeking a two-year delay in the implementation, arguing that “the project to overhaul critical systems lacked clarity.”

Speaking to FT, the company claimed that the ASX had failed to provide the “technical, operational and regulatory information” on the new system. The ASX has also not clarified on the new fee structure once it implements the new system.

The ASX should focus on improving its core systems rather than developing new commercial services, Ann Bowering told FT. Bowering, who is Computershare’s head of issuer services in Australia and New Zealand, believes that the Aussie stock exchange isn’t ready for such radical transformation.

She told the publication, “In order to get this project back on track we really need a robust governance framework which isn’t there today and at the end of the day, we need to take a look at the timeline.”

ASX should push the planned launch up to April 2023, Bowering believes. This will give all the stakeholders sufficient time to ready themselves for the transformation.

Computershare isn’t the only company that has expressed skepticism towards ASX’s blockchain system. CPS Capital, a local stockbroker, believes that the ASX will push many companies out of business if it launches the new system. The company’s founder Tony Cunningham told FT that the system will make ASX a monopoly.

The Australia Stockbrokers and Financial Advisers Association also urged the ASX to push back the launch by at least 12 months.

However, the ASX claims that it has consulted extensively with the stakeholders regarding the system.

The bourse announced the system in December 2017, stating at the time that it would give the users more control over their trading. If implemented, it will become one of the most significant uses of blockchain globally, facilitating the clearing of up to 2.5 billion shares a day.