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

12 February 2016  |  7701 views  |  0 chess

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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