Australian Securities Exchange (ASX) Delays Blockchain CHESS Solution Launch to 2021


ASX Postpones DLT-Based CHESS Solution Launch to 2021 After Consultation Feedback

A recent report published by the Australian Securities Exchange (ASX) has revealed that its plans to launch a blockchain-based solution to the currently existing CHESS clearing and settlement system has been postponed for half way in 2021. The report sprung into existence after taking a closer look at responses derived from consultation feedback, as per ASX.

Attempting to have a complete understanding of the blockchain technology, in particular, the distributed ledger technology (DLT), the project at hand is supposedly a combined effort of the ASX and their partner, Digital Asset. The duo has been working together since 2016 on this project, and only confirmed that a DLT solution would be used for its CHESS replacement in December 2017.

As for the reasons why a DLT based solution was considered, the report noted that it would serve as a “solid foundation for the provision of clearing, settlement, and other post-trade services,” adding that its increased security, transparency and users’ trackability of real-life data were also encouraging factors.

In terms of the consultation feedback, 41 written submissions were received which reflected opinions and views of stakeholders, payment providers, tech vendors, market operators and many others. After reviewing their input, ASX decided that changes were needed, and they go as follows:

  • Setting new system date from fourth quarter 2020 to March/April 2021
  • Providing additional six months for user development and testing
  • Extending mandatory accreditation by six months
  • Establishing a new requirement which reflects its respondents

Based on Coin Desk’s post, ASX found that “there was a common view in responses that too much new functionality was being proposed to be implemented in too short a timeframe,” hence a major reason why they had to postpone the DLT-based solution’s launch date. Other concerns that were addressed in making said changes stemmed from the uncertainty surrounding risks and regulations.

The project’s managing director and CEO, Dominic Stevens believes that the DLT-based system will bring one major benefit: cost efficiency, which has been projected as a saving of approximately $23 billion upon integration.

To read the either CHESS Replacement report, go to: https://www.asx.com.au/documents/public-consultations/response-to-chess-replacement-consultation-feedback.pdf

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