$23 million: A Figure That the Australian Securities Exchange (ASX) Could Save

The Clearing House Electronic Subregister System (CHESS) that is used by the Australian Securities Exchange (ASX) has been proven to be more expensive than a similar Blockchain platform by $23 million. The ASX is, therefore, mulling about a program to apply the blockchain technology to enable listed firms to save the millions of dollars lost through the existing system’s inefficiencies.

The CHESS System is Inadequate and Inefficient

Under the current CHESS system, the ASX charges the participants for settlement and clearing services at about 1.2% of their assets. This percentage amounts to a sum of $23 billion on superannuation.

According to the ASX CEO, Dominic Stevens, the Blockchain Technology will enable the ASX to increase revenues by 5% while ensuring that the investors and end-users incur lesser costs from the all-time high figure of $23 million per year. He has promised to ensure that the ASX adopts this Open Ledger Technology citing specifically that it is “worth pursuing.” Dominic Stevens disclosed this information during the yearly results release ceremony for the ASX.

The Benefits of the ASX Blockchain Platform are Immense

Stevens pointed out that the distributed ledger technology will eliminate the redundant reconciliation processes and enable participants to gain access directly to the ASX data without having to rely on third parties and brokers. This is because this phenomenon is the one that increases costs, time wastage and complexity of investing and makes investments less profitable in the long run.

Additionally, the CEO confided that the current distinct databases are fragmented and many. Hence, maintaining, supporting or upgrading them to new standards is not economically viable in comparison to the adoption of the DLT technology. Stevens is convinced that the Blockchain technology, apart from the benefits explained herein, is in a position to spur unprecedented innovation in the ASX.

In the same meeting, the CEO alluded that the Blockchain technology, based on its pillars of security enhancement, will only ensure permissible access to the ASX data. This will not only meet the market standards of allowing only the entitled investors to see crucial market information but also allow prospective investors to access real-time data.

The Blockchain Platform will Provide all Services

When implemented, the DLT will serve as a one-stop shop for all ASX services. Issuers, Investors, and Customers will be able to break free from the outdated CHESS platform with its multiple programmed interfaces. The one Harmonized Database will use the Ethereum-modeled Smart Contracts for on-platform consensus, rules of engagement, KYC management and administration, etc.

The Australian Securities Exchange is the 16th largest in the world by market capitalization. The DLT Technology was planned to be implemented in October 2015, however, the management has taken three years to research and develop a long-term Blockchain platform that will be implemented in 2 years as per Stevens’ roadmap.

The New York Based fintech firm, Digital Asset Holdings, is developing the ASX Blockchain Platform and will own a 5% stake in the new DLT Network.