Australian bourse blockchain settlement system faces new delays

The Australian Securities Exchange (ASX) is delaying the launch of its blockchain settlement system, after consulting with industry to reconsider the scope of the project.

The leading Australian securities exchange operator said the decision comes “after extensive industry consultation and a comprehensive project review,” which could see the aims of the system extended before launch.

According to the ASX announcement, the system is now expected to launch in 2023, to allow time to integrate additional features and scope.

ASX began efforts on its blockchain system as far back as 2016 and had until as recently as June 2020 been aiming for a 2022 launch. However, the COVID-19 pandemic has forced the burse to postpone its integration plans. Now, after speaking with representatives of the industry, ASX has said it is now preparing to expand its ambitions for the technology.

“The industry … requested substantially more post-trade processing capacity than what had been contemplated pre-COVID-19. This is in response to the extreme increases in trading volumes on the ASX platform during the most volatile period of the pandemic in March 2020.”

Working alongside its technology partner, the blockchain startup Digital Asset, the Australian bourse is aiming to create a system to replace the Clearing House Electronic Subregister System, or CHESS. CHESS has been used for settlements on the exchange for over 25 years.

In moving to a blockchain powered platform, ASX hopes to create a settlements system that is more cost effective, with less friction to trade, latency and risk for investors and institutions accessing the markets than the current CHESS system.

While the delay now extends its reliance on the CHESS infrastructure to April 2023 at the earliest, the new blockchain-powered system is likely to herald significant cost savings and process gains when it is finally available for roll out.

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