Australian Securities Exchange Switch to Blockchain Delayed to 2022

Published at: July 1, 2020

The Australian Securities Exchange (ASX) has further delayed its switch to blockchain after public lobbying from key stakeholders.

According to a June 30 update from the ASX, the exchange has officially delayed the rollout of Distributed Ledger infrastructure to replace its current system for processing equity transactions. ASX will now release the project — the replacement for the Clearing House Electronic Subregister System (CHESS) — in April 2022, a one-year push from its most recent timetable.

The exchange cited a number of reasons for the change including the current pandemic, accommodating changes requested by stakeholders, and providing a larger window of opportunity for development.

Peter Hiom, ASX Deputy CEO, said the exchange had “listened to the diverse views of stakeholders and accommodated feedback on timing, user readiness and changes to functionality.” He stated that the new CHESS system would “underpin Australia's financial markets for the next decade and beyond."

Customer feedback drives postponement

Users of the CHESS system lobbied hard to delay the launch of ASX’s blockchain system, with some saying the switch “lacked clarity.”

The CHESS timeline had been under review since March, when ASX announced it would  undertake consultations in June about the rollout due to the pandemic. 

Computershare, one of the main share registry companies in Australia, put pressure on the ASX during the consultation period, asking for a two-year delay. The company stated it had not been given critical information about how the blockchain system would operate or any difference in fees that may be required for services.

Tony Cunningham, founder of CPS Capital, a Western Australian stockbroker, also suggested a delay might be appropriate to better clarify how distributed ledger technology (DLT) would work at ASX for the share registry and broking.

Development of ASX blockchain project

As one of the first large stock exchanges to commit to using DLT, ASX has been working on the transition to blockchain since December 2017. 

The exchange released the first code for its replacement app development tool based on blockchain technology in May 2019. In October 2019, the Australian subsidiary of market operator Chi-X — the sole competitor of ASX at the time — called on regulators at the Australian Competition and Consumer Commission to investigate the possible effects of blockchain technology on trading activities. 

Cointelegraph reported that prior to the current pandemic, the CHESS rollout date had been set at April 2021.

Tags
Blockchain
Regulation
Australia
Law
Related Posts
Russia: Bitcoin Activity Rising Despite Strict Law Proposals
A branch of the Russian federal government has recently published a draft of new litigation called “On Digital Financial Assets,” which is focused on enforcing strict cryptocurrency laws in the country. The legislation has not been approved yet and has been in discussion since 2018. The new laws define Bitcoin as property but not legal tender, and propose, among many other things, that Bitcoin (BTC) miners register as individual companies so they can be appropriately taxed. President Putin is planning on developing and revealing a new tax for Bitcoin miners by July 1, but many are skeptical about the government’s …
Blockchain / July 1, 2020
DAO regulation in Australia: Issues and solutions, Part 3
Lawmakers in Australia want to regulate decentralized autonomous organizations (DAOs). In this three-part series, Oleksii Konashevych discusses the risks of stifling the emerging phenomenon of DAOs and possible solutions. Crypto anarchy is unlikely to be the future that the majority of people support. Company regulation, in its essence, has a lot of positive aspects or at least, a good intention, albeit one often embodied in a red tape that stifles business. Nevertheless, nowadays, corporation rules and regulations are formalized to the extent that they could be put in the machine code. So, the role of the government is to establish …
Decentralization / April 16, 2022
Why we need evolutionary, not revolutionary, regulatory initiatives
This July, Luxembourg — the world’s second-largest domicile for investment funds behind the United States — submitted a draft law updating a law from March 1, 2019 that allowed for the registration and transfer of securities by custodians. With this draft law, issuance itself can be based on distributed ledger technology, thereby introducing truly dematerialized DLT or blockchain-based securities. Furthermore, a central “issuance account” keeper (transfer agent) is required to assume responsibility, and the account keeper has to be authorized by any member state of the European Economic Area, which means that non-Luxembourg credit institutions and investment firms can be …
Technology / Sept. 12, 2020
Is Europe’s Experience in E-Signatures and Digital IDs Valuable for Australia?
Europe has been running a legislative framework for electronic signatures and digital identities since 1999. In 2014, the European Parliament introduced a significant upgrade by presenting electronic identification and trust services for electronic transactions in the internal market, or eIDAS, regulation. In light of recent initiatives in Australia to improve legislation for doing business remotely, this experience is valuable because the European community was among the first in the world to introduce electronic signatures, and it developed a unique legal and technological framework that many other countries borrowed. Though the experience is full of pitfalls and drawbacks, which are also …
Technology / April 28, 2020
Ideas vs. practice: How are regulators working together on crypto?
The regulation of cryptocurrencies across the world is a constant battle for investors in a rapidly expanding and constantly changing ecosystem. Various regulatory agencies around the world view digital assets in a different light that vary significantly from one another. Recently, executive board member of the European Central Bank (ECB) Fabio Panetta mentioned in a written statement for a speech to Columbia University that regulators should follow a globally coordinated approach while regulating digital assets. He said that the world should have digital assets regulated by the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) rules of the …
Decentralization / May 25, 2022