The operator of the Australian Securities Exchange, ASX, will complete an assessment of blockchain-style distributed ledger technology (DLT) as a replacement for its CHESS system by the end of the year, the company said today.
CHESS — Clearing House Electronic Subregister System — has provided clearing, settlement and asset registration services since 1994. Although it continues to function effectively, the ASX has been seeking a replacement that will bring added benefits to users.
In its full-year results presentation this morning, the ASX said development of enterprise-grade DLT software is expected to be ready for assessment in December which would be informed by a third-party specialist review of the technology. A technical committee working on global standards for the system’s messaging is on track.
The technology had “potential for significant operational efficiency and new service offerings for the entire industry” said ASX CEO Dominic Stevens this morning.
“The more we investigate the more we see potential for the technology across a wide range of applications,” he added. "Can we go to the next level with DLT? At the moment that looks very promising."
Over the last six months the ASX has been busy with stakeholder engagement efforts around DLT it added, running more than 60 demos to 110 companies, with further workshops and webinars in progress. Some 450 visitors have passed through the ASX’s DLT presentation suite in Sydney.
A consultation around ‘day one functional scope’ for DLT-backed equity clearing and settlement is expected in March next year.
“Taking a step back one of the reasons we are exploring the use of DLT is the potential to help our customers reduce the cost of their back office technology and general operations. Remember if we can provide our customers with a single source of truth on which they can rely then a whole range of service are possible,” added deputy CEO Peter Hiom.
The ASX shared details of its new futures trading platform, which was implemented over a single weekend in March this year as a replacement for the proprietary SYCOM platform introduced in the late 1990s.
The rollout of the new platform has resulted in seven systems, comprising 17 separate applications, being decommissioned and 20 databases across multiple environments being eliminated, the ASX said.
“Unless you were close to the industry you would not have realised that in the coming weekend it was going to be anything but normal. At that point the culmination of two years of planning, testing and hard work, not just from ASX but from the industry went into action,” Stevens said.
“At 8.20am on Monday orders started pouring into the pre-market, and at 8.30 trades began to match, and with that we entered a new era for the Australian Futures market… All this has led to a substantial upgrade in the way our customers conduct the business of futures,” he added.
The platform was delivering improved latency, real-time monitoring, enhanced risk management and faster resolution of issues for its 820 users, Stevens explained.
The company also saw growth in its information and technical services offerings, with increased uptake of automated data feeds and data analytics products.
There was also growth in the number of companies utilising the ASX’s purpose-built finance data centre, The Australian Liquidity Centre (ALC) and eight new customers had been added to the ecosystem. An upgrade of a secondary data centre is underway.
The company plans an upgrade and expansion of its ASX Net product, a managed network for the financial markets community which provides a direct connection to alternative liquidity venues, brokerage firms, data vendors and application service providers.
It is also exploring the use of artificial intelligence both internally and as an offering to customers, Stevens revealed.
“We’re also spending time examining the opportunities for making more of the substantial amount of data ASX collects available to our customers,” the CEO said. “And we’re at the early stages of investigating opportunities to use artificial intelligence and machine learning to better understand this data to enable us to create value for our customer and enhance how we manage our business,” he added.
The ASX reported capital expenditure was flat at $50.3m, thanks to its continued investment in technology. Net profit rose 1.9 per cent to $431.1 million in line with expectations.
The exchange is fast developing a “critical mass” of technology listings the ASX said, with 40 new listings from the sector in the 2017 financial year, including superannuation, insurance and investment software provider Bravura Solutions and mobile payments app-maker Pushpay.
Technology is now the third-largest sector by number of listings and continues to grow.