Australia’s ASX adopts blockchain technology to cut costs

A security guard looks out from a window of the Australian Securities Exchange (ASX) with a board displaying stock prices behind him in Sydney, Australia, May 26, 2016. REUTERS/Steven Saphore

Australia’s ASX Ltd said on Thursday it would replace its registry, settlement and clearing system with blockchain technology to cut costs for customers.

The decision to replace the Clearing House Electronic Subregister System (CHESS) on Australia’s main bourse follows two years of testing of distributed ledger technology, also known as blockchain.

“We believe that using DLT to replace CHESS will enable our customers to develop new services and reduce their costs,” ASX Managing Director and CEO Dominic Stevens said.

The move will make the Australian Securities Exchange one of the biggest mainstream financial markets to use the relatively new ledger system, best known as the technology underpinning the bitcoin crypto-currency.

Blockchain is a shared, verifiable and permanent record of data that is maintained by a network of computers.

Banks and other large financial institutions have ramped up their investments in the technology over the past few years, hoping it can simplify and cut the cost of back-office processes.

ASX expects to propose a timetable in March 2018 for transition to the new system, with a final date to be determined in consultation with market participants.

The system would be designed without access barriers to non-affiliated market operators and clearing and settlement facilities. It also would give ASX customers choice over how they use its post-trade services.

ASX bought a minority stake in U.S. blockchain developer Digital Asset through a A$14.9 million ($11.27 million) investment in January last year, to design a new post-trade solution for the Australian equity market.

The market operator’s decision is a win for the young technology company led by Blythe Masters, a former senior JPMorgan banker.

Founded in 2014, Digital Asset has raised more than $115 million from large firms including ASX, Goldman Sachs Group Inc , JPMorgan Chase & Co, CME Group Inc, Deutsche Boerse (DB1Gn.DE) and Citigroup (C.N).

“After so much hype surrounding distributed ledger technology, today’s announcement delivers the first meaningful proof that the technology can live up to its potential,” Masters, Digital Asset’s chief executive, said in a statement.

ASX shares gained as much as 0.88 percent by 0039 GMT, while the index was up 0.5 percent.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.