The Australian Securities Exchange has named incumbent virtualisation provider VMware as the infrastructure base to replace its CHESS core settlements system, trumpeting a new agreement it says will boost mutual customer access as its new blockchain platform rolls out.
The memorandum of understanding , which ropes in the ASX, VMware and developer Digital Asset (in which which the ASX has an equity stake), essentially gives the ASX’s many participants like broking houses and institutional banks, better infrastructure standardisation visibility over the new solution.
Based on Digital Asset’s open source smart contract language called DAML, the ASX’s CHESS replacement is a key foundation in building out a much bigger distributed ledger play across complex, multiparty transactions that can range from property conveyancing to bonds and other instruments.
At a macro-level, the ASX’s development of the new platform essentially underpins its strategy to continue morphing from being a commodity transactions infrastructure provider to a globally significant trading technology and data intelligence developer able to service a range of sectors and markets.
At the same time, the ASX is heavily pitching its emerging capability at the tech sector in terms of ease of public listings, essentially positioning itself to become a mini-NASDAQ by attracting new stocks and investors to its liquidity pool.
While local software darling Atlassian bypassed the local bourse for its IPO, the ASX has succeeded in retaining a swag of key local stocks now going global including WiseTech, Technology One and Xero as well as infrastructure plays like NextDC.
In essence, the market operator is transitioning to a full scale tech vendor able to provide both PaaS capability and access to liquidity to customers as it builds an exportable ecosystem of solutions that can be rented, resold or licensed.
While the ambitious plan to widen its reach is partly fueled by investor desire for growth, it is also an important hedge against upstart rival exchanges offering lower cost services mowing the ASX’s grass.
The CHESS replacement is set to go live in 2021, with the ASX revealing in July its application development test environment had gone live for participants to test.
In April the ASX CEO Dominic Stevens used the Macquarie Equities conference to emphatically reject the notion of the company looking to cut price outsourcing as a way to boost its margins, spelling out instead a strategic play to grow using the build-own-operate model for its tech estate and services.
“Like some other exchanges around the world, we could have outsourced our data centre to a third party. After all, we are a financial services company, not a technology company,” Stevens said at the time.
“We could have built a data centre that serviced ASX and its co-location clients who were seeking low latency connections. That would have been a logical low-risk option that focused only on how customers connect to ASX.
Instead, it’s bringing now its services to key vendors to take to their clients.
“This new partnership is a very positive development that will help us support a wider range of DLT solutions developed by the industry. It confirms our belief in the potential of DLT as we remain on track to deliver the CHESS replacement system in March-April 2021,” Peter Hiom, ASX Deputy CEO, said on Monday.
“Providing a state-of-the-art DLT-based system will create new business opportunities for the industry,” said David Tennenhouse, senior vice president and chief research officer at VMware.
“We’re working closely with DA and ASX on a combined offering to provide the enterprise-grade foundation for ASX, and we look forward to expanding our relationship.”