The Australian Securites Exchange (ASX) has confirmed a one-year delay to the cutover of its blockchain-based post-trade network, citing to the impact of the Coronavirus crisis on market volatility and user demands for more testing and additional functionality.
The ASX has been working with DLT specialist Digital Asset since 2017 to replace its Chess post-trade settlement system with a blockchain-based platform. Initially set for go-live in April 2021 - a date which subsequently morphed into April 2021 - the Exchange confirmed a pause in March to seek user input on the schedule.
ASX says that while most Chess users indicated they could meet the proposed go-live date of April 2022, many asked for extra industry testing, more time to prepare for the new system and additional functionality that reduces manual processes, such as electronic corporate action elections..
The feedback also reflected on the impact of Covid-19 on collaboration and productivity and the need to further reduce cutover risk to the new Chess system.
The industry also requested substantially more post-trade processing capacity than what had been contemplated pre-Covid-19 in response to the extreme increases in trading volumes on the ASX platform during the most volatile period of the pandemic in March 2020.
This period saw unprecedented ‘bursting’ of daily trade volumes, says ASX, with additional trades in early March eclipsing previous records by approximately 3.5 million trades, compared to historical bursts of less than 0.5 million trades.
This increase has reset industry and regulator expectations about the possibility of further step increases in daily trading records, says ASX chief Dominic Stevens.
“It is clear that Covid-19 continues to impact the whole industry, including ASX, and this has evolved what our stakeholders want from the Chess replacement system. In parallel, ASX has considered how we can reduce delivery risk, enhance the customer experience and continuously improve project execution. Consequently, we have increased the scope of the project and extended the timeline.”
At the start of October, Australia's central bank and securities regulator had called on ASX to launch the DLT system as soon as safely possible.
Says Stevens: “By its nature, a consultative process that considers all industry feedback will not satisfy everyone. We acknowledge those who have been working hard and would have preferred a faster delivery time."