The Australian Securities Exchange has confirmed plans to replace its Chess post-trade settlement system with a new blockchain-based platform provided by Digital Asset.
The exchange operator has been testing Digital Asset's technology in parallel to the routine running of Chess over the past two years, and in June last year paid $7.16 million to increase its stake in the US startup from 5% to 8.5%.
The Exchange has so far given given over 80 DLT system demonstrations to more than 500 attendees, and conducted over 60 Chess replacement workshops for more than 100 organisations from across the financial services industry.
In a statement, ASX says it will continue to consult with stakeholders to finalise the scope of Day 1 functionality for the new system and release proposed timings for the transition at the end of March 2018.
Customers will be able to connect in a similar way they do today, with the addition of using contemporary global ISO 20022 messaging, or they may interact directly with the distributed ledger.
The new system will be operated by ASX on a secure private network where participants are known, ‘permissioned’ to have access, and must comply with ongoing and enforceable obligations. ASX says the testing of the platform has included two independent third party security reviews of DA’s technology.
Dominic Stevens, ASX Managing Director and CEO, says: “We believe that using DLT to replace Chess will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets. While we have a lot more work still to do, today’s announcement is a major milestone on that journey.”
Coinciding with the decision, ASX will exercise its pro-rata right to participate in DA’s recent Series B fundraising and subscribe for US$3.5 million convertible notes.