ASX wavers over future of Chess platform as it begins work on blockchain settlement

ASX wavers over future of Chess platform as it begins work on blockchain settlement

The Australian Stock Exchange says it plans to hire more staff as it lays the groundwork for the introduction of of a new post-trade platform based on distributed ledger technology.

In its full-year report, the ASX provided more details on its plans for distributed ledger technologies following its recent participation in a $50 million funding round in Digital Asset Holdings, the blockchain startup helmed by former JP Morgan luminary Blythe Masters.

The Australian exchange says it invested $14.9 million in the US-based blockchain startup to acquire a 5% shareholding, fund an initial phase of development, and purchase warrants that give it the right to acquire additional shares and appoint a director if certain conditions are met.

The initial development will take place over the next 6 to 12 months, alongside the existing Chess platform, which will continue to operate as normal.

The long-term future of Chess remains uncertain, however, as the use of distributed ledger technology reshapes the way in which stock are settled.

In a statement, the Exchange says: "Rather than replace Chess with technology based on the same legacy processes that operate in the market today, ASX will aim to work with its stakeholders to re-engineer and simplify those processes to deliver significant benefits to market users."

A final decision on the future market design is expected by mid-2017, says the Exchange. "This will include a decision on the future of Chess."

Elmer Funke Kupper, ASX managing director and CEO, told investors: "We believe that distributed ledger technology has the potential to change the way our market operates end-to-end, reduce risk and costs for our clients, speed-up the settlement process for investors, and support new services for listed companies. It provides a unique opportunity for Australia to be a world leader in the adoption of innovative market solutions.”

He adds that ASX and Digital Asset will engage with regulators and Government agencies to ensure that any future post-trade solution "meets the high regulatory, operational and security standards that apply to Australia’s financial markets".

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