The ASX says its new blockchain platform will be ready by the end of 2020

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  • The ASX plans to roll out its blockchain platform by late 2020 or early 2021.
  • The distributed ledger will replace the CHESS system for clearing and settling transactions.

The ASX has released a consultation paper for the proposal to replace its CHESS system for clearing transactions to a blockchain platform based on distributed ledger technology (DLT).

“The new system is estimated to go-live between the 4th quarter 2020 and 1st quarter 2021 (calendar years),” the ASX said in a statement.

“These dates are subject to completion of system development, stakeholder readiness and regulatory clearance.”

The consultation paper follows an announcement by the ASX last December that it will be switching to the blockchain, based on technology developed by Digital Asset — a company founded in 2014. The ASX invested $14.9 million in Digital Asset in January 2016.

The new technology will replace CHESS (Clearing House Electronic Subregister System) — which is the current platform for clearing, settlement and other post-trade services for Australian stocks.

This table summarises the indicative timeline for each phase of the roll-out:

Source: ASX

The table forms part of an 87-page consultation paper which the ASX has released for industry review, with a request for comments to be submitted by June 22.

At the time of the switch-over in either late 2020 or early 2021, the ASX plans to transfer all client services over to the new platform in a single weekend.

Prior to that, migration testing is planned to commence in June 2020 — including practice runs to test functionality and prepare for the change-over.

The new system will be tested to handle up to 10 million transactions per day as part of the implementation phase. The ASX currently processes around 5.4 million transactions per day.

The ASX will aim to keep its current T+2 time-frame in place for transaction settlements, although some types of transactions may be approved in one day or less under the new system.

While the new system will be based on a distributed ledger, users will need to obtain clearance to use it and the ASX will maintain centralised control.

“Permissioned users will be able to initiate transactions, but only ASX will have the authority to commit transactions to the ledger,” the company said.

Following consultation with industry, the new system aims to address approximately 50 new business requirements while removing other functions that are now considered redundant.