By
Bhushan Akolkar
April 5th, 2024
Masters’s Digital Asset Holding is working together with Australian exchange ASX to develop a new securities settlement platform on the basis of the blockchain.
Reuters informs that Blythe Masters, current CEO at Digital Asset Holdings and just one of the most influential women in the bitcoin and blockchain industry, shared her opinion that Australia will soon take a lead and develop one of the world’s first blockchain-based databases for settling equities trades. If successful, it will save brokers millions of dollars in back office costs. Masters strongly believes that blockchain can replace the traditional databases that underpin securities settlement.
Masters admitted that Australia suited best of all for the launch of new securities settlement platform developed on the basis of the distributed ledger technology. “Australia is the perfect environment for this type of project,” Masters said. “The project the Australian exchange ASX is running has the potential to be one of the first successful projects of this type in the world.”
According to Masters, if you just have the one record, which represents the truth of transaction history, or customer data, or identify, or registration, “you will have the opportunity to eliminate layers and layers of inefficient post-trade processing that costs a fortune, consumes a lot of jobs and leads to delay and increases risk”.
The ASX has bought a stake in Digital Asset Holdings for A$15 million ($11.39 million). The two companies are working together on blockchain’s study and practical application to finally come up with the platform that will allow to reduce settlement times and streamline risk management, market supervision and back-office compliance for market participants.
“There are ultimately some real benefits in terms of cost reduction,” Masters said. She evaluates that the blockchain-based database can improve the security of trading infrastructure and cut the cost of running settlement infrastructure by 50-70 percent.
Blockchain enables to encrypt the data which will result in the system supporting complex levels of user access for the various parties in the securities trading chain, according to Masters. Digital Asset Holdings and the ASX both aim at employing the system where the ledger is flexible enough to allow individual trades on different settlement time frames.
Former ASX chief executive Elmer Funke Kupper agrees that the blockchain can cut some of the $4 billion to $5 billion it costs to run the equity market each year.
“When you think about the equity market today, it’s a very sequential process. It’s a complex sequential process for what is a very simple transaction. These processes are 20-plus years old. We realise if we can bring everyone along on this journey of blockchain that $4 billion to $5 billion could become a smaller number. But we could unleash innovation, competition and better services across the value chain.”
Blythe Masters explained why Australia was chosen for testing these blockchain ideas. The Australian markers are characterized with the lack of fragmentation, centralized clearing and settlement. She also mentioned the support from regulators such as the Australian Securities and Investments Commission (ASIC) saying that it made Australia “very attractive” to innovators and startups.