ASX details timeline, features for new blockchain-inspired system

ASX Limited, the operator of the Australian Securities Exchange, has released new details of the system inspired by Bitcoin’s blockchain technology that will replace CHESS: The ASX’s Clearing House Electronic Subregister System.

CHESS provides clearing, settlement and other post-trade services for the exchange. ASX in early 2016 revealed that it had acquired a stake in New York-headquartered Digital Asset Holdings, which develops blockchain-inspired distributed ledger technology (DLT). The intention was to explore whether a DLT-based system could potentially replace CHESS, which was originally rolled out in 1994.

Although the exchange operator has emphasised that CHESS is stable and continues to function effectively, ASX says that replacing it with a blockchain-style system will offer a range of benefits. Those include, according to a new consultation paper on the scope of the CHESS replacement and an implementation plan, “more efficient clearing, settlement and other post-trade services through improved record keeping, reduced reconciliation, more timely transactions, and better quality data”.

Unlike Bitcoin’s public blockchain, which is used to provide a record of transactions involving the cryptocurrency, the distributed ledger outlined by ASX will be a permissioned system, with a managed on-boarding process for participants.

In order to ensure a degree of backwards compatibility, ASX said that although the new system will allow market participants to run a DLT node, there will also be the option to conduct message-based transactions in a similar fashion to CHESS.

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Source: ASX details timeline, features for new blockchain-inspired system – Computerworld