The ASX is investing $15 million in blockchain technology

Data cabinets inside the Australian Liquidity Centre. Photo: Chris Pash

As part of the ASX’s $50 million, four-year systems overhaul, their new post-trade platforms will be based off blockchain technology.

The ASX says they paid $14.9 million to fund the development of the technology as well as a 5% equity interest in Digital Asset. They’re hoping the use of the technology could mean real time settlements of equities trades while also reducing risk and compliance costs.

A blockchain, which is also known as a distributed ledger, is a secure network of computers which can maintain records without interaction from an outside party.

The ASX currently uses the CHESS system, which they were keen to move away from directly due to the lack of innovation in post-trade equity services over the last 20 years.

“We should aim to re-engineer and simplify those processes to deliver significant benefits to the users of the market,” ASX managing director Elmer Funke Kupper said in a statement.

“Rather than replace CHESS with a new version that is based on the same legacy processes that operate in the market today, we should aim to re-engineer and simplify those processes to deliver significant benefits to the users of the market.”

The ASX’s move comes just one day after the Commonwealth Bank completed a successful test with 10 other banks across the world using a blockchain for trading.

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