ASX Limited — the operator of the Australian Securities Exchange — has begun offering its customers access to a development environment for its new blockchain-based replacement for CHESS.
CHESS — Clearing House Electronic Subregister System — currently facilitates clearing, settlement, and asset registration for the exchange. ASX says that although Cobol-based system, which was implemented in 1994, remains stable, its replacement will offer a range of advantages to market participants.
ASX today opened access to a customer development environment (CDE) for the CHESS-replacement system, which is based on distributed ledger technology (DLT) from Digital Asset Holdings (of which ASX is a part owner).
“This allows customers to start experimenting with the new DLT-based CHESS environment and build connectivity to it, before industry-wide testing begins next year,” ASX CEO Dominic Stevens told the Macquarie Equities Conference in Sydney.
“Today’s drop of software into the test environment is the first of seven over the next year, so it is early days. They will be landing every six to eight weeks and will allow customers to look at business functionality and compare the range of access options, such as updating to the global message standard - ISO 20022 - or directly integrating to a node to get real-time access to the source of truth.”
The new system will support applications written in a ‘smart contract’ language called Digital Asset Modeling Language (DAML). Digital Asset Holdings earlier this month open sourced its DAML SDK under the Apache 2.0 licence. It also released the source code for DAML.
“DAML is a functional programming language designed specifically for use in multi-party business processes, often referred to as smart contracts,” a statement from the US-headquartered company said. “DAML abstracts away the underlying complexities of blockchains and database technologies, allowing developers to focus on the logic of the applications they are building. This greatly reduces the time to market for new applications and allows for increased agility.”
In addition to ASX, developers from ABN AMRO, Accenture, BNP Paribas, Broadridge Financial Solutions, Calastone, Change Healthcare, The Depository Trust & Clearing Corporation (DTCC), Forms Syntron, GFT, Hashed Health, Hong Kong Exchanges and Clearing (HKEX), Industrie&Co, IntellectEU, MV37, Nomura Research Institute, Singapore Exchange, and UBS, participated in a private DAML beta program.
“The open sourcing of DAML is great news for software engineers and market users seeking to understand how DAML can manage complex multi-party workflows better than other smart contracting languages,” ASX deputy CEO Peter Hiom said in a statement.
“As we develop the CHESS replacement system based on [Digital Asset] technology at ASX, the open sourcing of DAML will accelerate the creation of a software developer community in Australia and the adoption of DAML globally.”
CHESS “is not a platform for the 2020s and beyond so the question is not ‘if’ to replace but ‘when?’ and ‘with what?’” Stevens said in his presentation today.
The new system will support the existing functionality of CHESS but do away with the aging system’s proprietary messaging protocol in favour of a global ISO standard, he said.
The new system will also “35 new functional specifications which were developed over an extensive consultation period of 18 months with working groups representing the broad market” and allow users to connect to a “real-time source of truth,” potentially reducing risks and costs as well as opening opportunities to build new, innovative services.
In September, ASX announced that it would push back the target go-live date for the new system from the fourth quarter of 2020 to March-April 2021.