The new system will replace the current CHESS IT architecture, which dematerialised the Australian stock market more than 25 years ago by switching from paper to electronic communications.
The decision to extend the time for the replacement of the current computer system was taken during the meeting of the technical committee on 4 September, which analysed the results of the last public consultation launched by ASX on 27 April 2018 and concluded on 22 June.
ASX has received 41 written opinions representing the views of a wide range of stakeholders, including payment providers, back-office technology providers, market participants, industry associations representing brokers and custodians.
Interested parties have asked ASX for clarifications and more detailed information in specific areas in order to plan in time the changes to their systems and to calculate the economic costs that these changes will entail.
The written opinions contain detailed suggestions and comments to which ASX intends to respond through working groups that will be set up in support of the implementation and migration plans from CHESS to the new DLT system.
A project started in 2015
This is the last step in an evaluation process launched in 2015.
In January 2016, ASX chose Digital Asset as its technology partner for the development of the DLT platform to manage the Australian Seurity Exchange’s markets.
Digital Asset has created an initial prototype of the digital platform to show ASX the functioning and potential benefits of the new IT system.
Since then, various work phases have followed, culminating in December 2017 with the analysis and assessment of the technology by the technical committee appointed by ASX. The work has analysed four technical aspects in particular:
- Complete functional verification of the clearing and settlement functions performed by CHESS.
- Scalability testing and security requirements of the replacement system.
- A wide involvement process of all interested parties to receive user input on the desired or to be implemented features in the replacement solution.
- Security audits by third parties on the DLT prototype presented by Digital Asset.
ASX stock exchange: the benefits of the DLT system
According to Australian Securities Exchange data, a DLT-based architecture provides a highly secure environment for clearing, settlement and other post-trading services.
In particular, the following benefits are expected:
- Reduction of risks;
- reduced need for reconciliation between different databases;
- timely transactions and a truth data source of better quality.
The ecosystem is based on the smart contract model developed by Digital Asset and known as DAML.
The solution will help customers develop new products and services based on automated and simplified workflows.