ASX Limited, the operator of the Australian Securities Exchange, has established a ‘DLT Solutions’ team that it says will use its experience of implementing blockchain-inspired distributed ledger technology to help its customers.
ASX is in the process of rolling out a DLT-based system to replace CHESS: The Clearing House Electronic Subregister System, which was originally implemented in 1994.
CHESS provides clearing, settlement, and asset registration services for market participants. The system is written in COBOL and employs proprietary message formats for communication.
The CHESS replacement, which is expected to go live in 2021, is based on DLT software from Digital Asset Holdings (ASX is a part-owner of DAH).
ASX expects the new system to help cut costs and reduce the potential for errors, giving market participants the option of running a DLT node that is “part of the source of truth database held by ASX” instead of operating and reconciling multiple databases.
“The new system will enable customers to clear and settle equities in the Australian market just as CHESS does today – but with a system that offers better performance, resilience and security, as well as new functions requested by customers during our extensive market consultation,” chief executive Dominic Stevens said in notes prepared for the company’s full-year results briefing today.
“Also, the new system uses the global messaging protocol ISO 20022, bringing it into line with the standard used by the RBA and other international exchanges.”
In its annual report, published today, ASX said its distributed ledger “will be secure, privately permissioned and operate behind ASX’s perimeter firewalls”.
“Users will be required to meet licence and regulatory obligations, and will only be able to access the information to which they are legally entitled,” the document states. “Through the design of the ledger, the privacy and security of users’ data will be enhanced, with the system resiliency, tamper detection and cryptographic features of our DLT infrastructure making the ledger even more secure.”
ASX has previously indicated it was interested in broader use of DLT beyond just the equities market.
Through the DLT Solutions team, ASX is “looking at other ways we can use our growing expertise to help customers identify how they might be able to benefit from using a distributed ledger,” Stevens said today.
“Our DLT Solutions team is having a range of discussions about equity and non-equity related opportunities,” the CEO said.
The DAH platform that ASX is employing uses an ‘smart contract’ language called Digital Asset Modeling Language (DAML). Because DAML and its SDK are open source, “it’s available for those wanting to investigate how they might use it on our distributed ledger, other distributed ledgers, as well as traditional databases,” Stevens said.