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A blockchain-based trading system is almost ready for the connection to the Australian Securities Exchange (ASX).
During a Tuesday announcement, the National Stock Exchange of Australia (NSX) revealed that the Australian Council of Financial Regulators approved at its October meeting access of its blockchain Digital Exchange Sub register System (DESS).
Now, the Australian Securities and Investments Commission is making final steps before it goes live. The firm assured stakeholders that “DESS is already technically and operationally ready for service to commence data accumulation and writing to the blockchain.”
Uncomfortable Delays in the Launch of ClearPay
DESS reportedly came about as a result of a joint venture between NSX and iSignthis, a financial services firm. iSignthis and NSX CEO John Karantzis earlier on made accusations against ASX claiming that it is blocking the venture from gaining access to its services ClearPay. For almost five years, the company had been developing a DLT-based replacement for its current ageing clearing system, but ASX seems to be crushing that momentum.
ASX held a “public inquisition” into ClearPay competitive advantage over Austraclear its settlement service. Last October, iSignThis shares were suspended from trading on the stock exchange. Unwillingness to comply with the exchange’s listing rule was identified by ASX as the main reason for the suspension.
Since 2017, ASX has itself been engaged in a DLT-based clearing and settlement system to replace its ageing COBOL-based system CHESS (Clearing House Electronic Sub-register System). The new distributed ledger technology (DLT) based system employs a blockchain-esque system.
In a recent public statement, the Reserve Bank of Australia (RBA) and Australian Securities and Investments Commission (ASIC) advised ASX not to delay the system’s replacement but to do it in a safe but timely manner. According to the two regulatory authorities improvements in Australia’s financial system performance would be evident, and investor’s confidence bolstered.
ASX, on the other hand, replied that delays are necessary for assurance that the DLT-based system is fit to accommodate peak capacity. Karantzis told stakeholders that launching of ClearPay would occur in early 2021, but the exchange came out in late March and stated coronavirus uncertainty had caused delays in the launch date.
New Blockchain System Facilitates Improved NSX Services
Both the DESS and CHESS systems would be used by NSX in writing its Nasdaq trading engine. As long as the Open Access and Trade Acceptance Service regimes arm of ASX clears access, it would be good to go.
Relying on distributed ledger technology, ClearPay was unveiled in February with the aim of not only facilitating same-day settlements but also making the share registry, the exchange and trading participants to have an up-to-date accounting mechanism within themselves.
Therefore, besides migrating bond markets clearing and settlement of onto the blockchain, ASX desires to reduce trading firms’ reliance on multiple systems with regard to diverse kinds of asset classes. Some market analysts describe ASX move as a leap of faith into the technological unknown.
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