ASX CEO Expresses New Confidence in Blockchain Post-Trade Tests

The Australian Securities Exchange (ASX) revealed today that it expects to increase the amount it will invest in distributed ledger technology as part of its broader plans to become the first exchange in the world to upgrade to post-trade services built using the technology.

After having already invested AUS$20.3m to develop the technology and more, the exchange's CEO, Dominic Stevens, now says that number will rise to AUS$50m ($38.5m) by the end of this year.

The money is intended to build on DLT being developed by blockchain startup Digital Asset Holdings, of which it is a financial backer, along with other infrastructure investments.

Speaking today during a presentation of the exchange's financial performance, the leader of ASX's DLT project, Peter Hiom, further said that a series of tests has given the company new confidence its investments will lead to a faster and more scalable solution than its existing Clearing House Electronic Subregister System (CHESS) platform.

Hiom said:

"We have also made good progress with our technology partner, Digital Asset Holdings, to build base-level functionality to facilitate cash market settlement."

During the talk, ASX reported a total group revenue increase of 2.8% to AUS $386.6 million, with a profit after tax of $219.4m.

Demonstration details

As part of ASX’s plans to further cut costs, it participated in a $60m investment round in distributed ledger startup Digital Asset Holdings, and later increased its stake as part of an effort to replace CHESS last year.

The exchange joined with Digital Asset to build a "demonstration suite" that it uses "to bring to life the possibilities" of DLT, Hiom explained.

As detailed today, ASX has used the suite to better understand and prioritize the business requirements of its customers.

In total, the DLT demonstration suite gathered data from 350 people based on 50 presentations and 40 workshops, according to documents presented to CoinDesk.

A summary of those results — which are likely to be mixed — are scheduled to be released by the end of this quarter, with addition research related to Swift standard ISO 20022 coming throughout the year.

Stevens expects it will take ASX between three months and six months to parse through the data to determine what might be feasibly implemented in an early live version, if anything.

Hiom and Stevens both agreed a final decision on whether to upgrade CHESS using DLT would be ready by the end of this year.

"There is a whole range of diverse people to try to bring together to try to come to what is the weighted average best decision to move forward," Hiom said.

Blockchain competition

After years of having a government-granted monopoly on clearing, ASX last year learned it may not stay that way for much longer.

Following the news, that the Australian government might open up the market to competition, the Sydney Stock Exchange began its own blockchain experiments.

However, in response to a question from the audience about potential competition, Stevens deflected saying he had no "imminent" concerns.

Coupled with the time-consuming effort of building a product that suits so many stakeholders, Stevens minced no words about the amount of work ahead as the exchange seeks to become a trailblazer on new technology.

Stevens concluded:

"If there’s a competitor who wants to come into that, I think if I was them, I’d wait to see where that dust is settling before moving forward."

Images via ASX