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ASX Ltd, Australia’s bourse operator, has now pushed the date of its blockchain-based clearing system launch until April 2023.
On Wednesday, ASX issued a statement saying that it had conclusively consulted market participants and reached the resolution to move the scheduled launch on April 2022 to now 2023.
“The industry … requested substantially more post-trade processing capacity than what had been contemplated pre-COVID-19. This is in response to the extreme increases in trading volumes on the ASX platform during the most volatile period of the pandemic in March,” the company said.
At the beginning of last month, the ASX published a report stating that the new blockchain system expected to go live by the end of 2020 will be delayed until March or April 2021. Coronavirus pandemic caused market turmoil in March that made many cryptocurrencies plummet, as a result, the firm delay the project.
A new distributed ledger technology (DLT) network was expected to replace the archaic CHESS clearing and settlement system (CHESS) within a period of six months.
Development of the CHESS’s Replacement Took Significant Time
ASX’s revealed its plans to replace the CHESS with DLT, which is commonly known as ‘blockchain,’ back in 2017. The aim was to incorporate major blockchain-powered efficiencies in CHESS so as to speed transactions, reduce costs, and improve security.
So the exchange initially planned that the system would be ready before 2020 ends. However, the company said that the blockchain implementation would be delayed for six months because it was necessary to have adequate time to conduct some user development tests.
Following ASX’s agreement with Digital Asset Holding (DA) and VMware, an NYSE-listed tech firm, ASX Deputy CEO Peter Hiom firmly believed that distributed ledger technology would CHESS in March-April 2021. Customer Development Environment was a code ASX released for its blockchain-based replacement app development tool at the beginning of May 2017.
DTL System Tripled Capacity to Enhance ASX’s Functionality
Dominic Stevens, chief executive of ASX, explained to shareholders during the company’s annual meeting this year that they would triple its planned DLT system capacity due to the surge in trade volumes that were witnessed back in March. Extension of the timeline for the launch was necessary to accommodate significant additional capacity and functionality demand.
CHESS-replacement has been in progress for the last four years, which has made many analysts question its validity. A group of financial market startups involving more than 6 million “mum and dad investors dubbed the CHESS Replacement Stakeholder Group (CRSG) also questioned ASX’s monopoly position potential in the market last year. The CRSG argued out that DLT system integration would threaten the survival of share registries, brokers as well as other stakeholders since it would hamper competition in major market segments.
Rick Holliday-Smith, ASX chairman, on the other hand, claimed that the DLT platform makes market participation easier as it simplifies clearance and settlement, thereby creating new paths for competition. DLT combines standardized APIs, message protocols, and rules to enable users to share private data securely. For now, stakeholders have to wait longer for the anticipated launch of DLT poised as a potential game-changer that would replace the COBOL-based ASX’s CHESS system.