ASX picks NASDAQ tech for post-trade clearing overhaul

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ASX picks NASDAQ tech for post-trade clearing overhaul

No movement on blockchain yet.

The Australian Securities Exchange will consolidate its three clearing systems onto the one platform based on NASDAQ technology as part of its $50 million, four-year technology transformation.

This time last year the stock exchange detailed its plans to completely overhaul its trading and post-trade platforms.

The effort started with its trading technology - managing derivatives, equities, risk management and market monitoring - under the two-year, $35 million first phase of the project.

Swedish firm Cinnober Financial Technology was chosen to deliver the new derivatives and equities trading platforms, while US-based business intelligence and infrastructure firm Tibco will provide new middleware for the market monitoring system. 

The NASDAQ's Sentinel Risk Manager was chosen as the underlying technology for the ASX's new risk management system, which includes the central margining engine supporting the ASX's two clearing houses.

The default management component of the risk management platform went live late last year, and the new Cinnober-based derivatives platform was put into beta around the same time, ahead of a full launch this year.

The ASX today revealed it had also chosen NASDAQ technology as the foundation for its new clearing platforms, continuing a relationship that has been in place since 1996.

It will standardise on the NASDAQ Genium INET clearing platform - which is already in use for future clearing at the ASX - extending it to both equities clearing and equities options clearing.

Post-trade services form phase two of the overall project. Vendor scoping and design selection has already begun for the second phase, and the overhaul will begin in earnest once phase one is complete early next year.

"This post-trade phase of ASX’s technology refresh will enable ASX to deliver globally proven technology and significant benefits to the Australian market, including increased flexibility, reduced complexity and scale efficiencies," ASX CIO Tim Thurman said in a statement.

In January the ASX revealed it was intending to base its new post-trade platforms on distributed ledger - or blockchain - technology.

It became one of 13 organisations around the world to make a minority investment of $14.9 million in fintech firm Digital Asset to fund the development of a post-trade solution for clearing and settlement services.

The ASX is hoping it can avoid replacing its aged CHESS platform with a new version that uses the same legacy processes by working with Digital Asset to test whether blockchain technology can operate at the scale of the local equity market.

It will keep using the CHESS platform until it makes a final decision next year.

"While we have announced that ASX is exploring the potential of distributed ledger technology – or blockchain – to transform settlement processes in our market, we will continue to operate our existing post-trade services as normal," Thurman said today.

The ASX recorded an intial $7.7 million restructuring charge in its last fiscal year results as a result of the technology transformation project.

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