Australian Securities Exchange (ASX) is migrating from its existing trading system to a blockchain technology-based platform, developed by former JPMorgan executive Blythe Masters, that will bring the firm savings of up to $23 billion annually. The ASX will be the world’s first stock exchange on a DLT-based platform.
ASX CEO Dominic Stevens says that apart from the massive savings in the form of fees currently paid by Australian firms for several investment services, including insurance and online services, distributed ledger technology will provide users with a more efficient service.
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“In a DLT world, instead of sending messages back and forth to reconcile the many and varied databases, participants who choose to connect by having a node are linked via the distributed ledger that forms a perfect chain of title that cannot be altered,” says Stevens. “This will provide tremendous value by being a great business enabler for our customers. And a significant enabler of innovation for issuers and investors.”
From CHESS to DLT
The ASX, the world’s sixteenth largest exchange, currently operates on the centralised Clearing House Electronic Subregister System (CHESS). Stevens explains that the move will make the reconciliation process redundant because users will be allowed to access the correct data in real-time without having to consult the ASX.
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The new system will also reduce risks and costs while making processes more straightforward and efficient by doing away with the current disparate databases, which are very expensive to maintain, upgrade and support.
“By doing all of this within a highly secure environment where permissioned users have access only to the data that they are entitled to see, ASX is safely liberating the source of true information in real-time such that it can be used by participants and other providers to build new services across the value chain,” Stevens explains. “This will provide tremendous value by being a great business enabler for our customers, and a significant enabler of innovation for issuers and investors.”
Simplifying regulatory compliance
Stevens also believes that access to real-time data on the DLT platform in conjunction with artificial intelligence (AI) will simplify regulatory compliance and recover profits lost after the global financial crisis.
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“If the value of what we can deliver by providing an enriched, real-time source of true information to the industry ultimately allows the industry to offer new services that create only 5% incremental revenue or cost savings to end issuers and investors, we think it’s absolutely worth pursuing,” adds Stevens.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.