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The Australian Stock Exchange (ASX) will replace its Chess equities clearing and settlement system with a distributed ledger technology (DLT)-based system under a new agreement with VMware and Digital Asset (DA), a financial technology firm.
Under the terms of a memorandum of understanding inked between the three parties, the ASX will deploy the new system that will be developed with DAML, an open source smart contract programming language, along with the necessary infrastructure to support data privacy, confidentiality and security requirements at scale.
The replacement system is being progressively deployed in ASX’s customer development environment, where customers and their service providers have begun exploring the clearing and settlement functionalities.
In a statement, the ASX said the partnership would strengthen its ability to support the financial industry, by using the DLT infrastructure to create new services – beyond clearing and settlement – for other customers in Australia and New Zealand.
“This new partnership is a very positive development that will help us support a wider range of DLT solutions developed by the industry,” said ASX deputy CEO Peter Hiom.
“It confirms our belief in the potential of DLT as we remain on track to deliver the Chess replacement system in March to April 2021,” he added.
Yuval Rooz, co-founder and CEO of Digital Asset, said the company was achieving the milestones to deliver a production-grade, scalable distributed ledger solution for the Chess system.
“VMware is now part of the mission we share with ASX to deliver a DAML-based distributed infrastructure to realise the full potential of this technology,” he added.
David Tennenhouse, senior vice-president and chief research officer at VMware, noted that providing a state-of-the-art DLT-based system would create new business opportunities for the industry.
“We’re working closely with DA and ASX on a combined offering to provide the enterprise-grade foundation for ASX, and we look forward to expanding our relationship,” he added.
ASX’s move to embrace DLT comes on the back of Australia’s growing interest in blockchain, a type of DLT.
Adrian Turner, CEO of Data61 digital research network, said blockchain could potentially reframe financial services and address industry issues, such as food provenance and quality of agricultural exports.
Blockchain could also bolster Australia’s productivity, which has declined more sharply than in other Organisation for Economic Cooperation and Development (OECD) nations.
Read more about DLT and blockchain in Australia
- Although blockchain is no silver bullet, experts say Australian organisations should embrace and invest in the technology.
- A number of blockchain projects are under way in Australia, but questions remain about whether the technology is wanted.
- Australia’s Digital Transformation Agency has warned fellow government agencies of the limitations of using blockchain to share and exchange information across government.
- Australia’s blockchain scene is buzzing, as organisations ranging from start-ups to the country’s largest banks and government agencies look to harness the technology.
The major banks in the R3 distributed ledger consortium are developing a platform for financial transfers, while Australia Post and energy supplier AGL are both involved in blockchain pilots.
Even wine makers are jumping on the blockchain bandwagon. In May 2017, a pallet of Australia’s Coonawarra wine completed a 8,100km journey to Qingdao, China, with its provenance backed by a blockchain-based platform designed by Sydney startup TBSx3.
Despite the promises of blockchain, the Digital Transformation Agency has dispelled some myths around blockchain and called for government agencies to be cautious about using the technology.