Aussie brokers want more blockchain at ASX

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Aussie brokers want more blockchain at ASX

Call for greater use of platform.

Stockbrokers have urged the Australian Securities Exchange to be even bolder with its plans to replace its CHESS central clearing platform with a blockchain-based system and include a raft of other processes.

Since last September the ASX has been consulting with the market on the replacement of its CHESS post-trade equity services system.

It is currently prototyping an "industrial strength" blockchain-based solution to work out whether the distributed ledger technology can work at the scale of the local equity market.

The ASX is developing the solution with start-up Digital Asset, in which it holds an 8.5 percent stake.

But despite concerns about the security of the platform raised by shareholders late last year, the ASX today revealed many stockbrokers want the exchange to go even further down the blockchain path.

Its report on the consultation [pdf] reveals stockbrokers want more processes - like the paper-based transfer of securities, among others - added to the platform.

"Some indicated that without significant upfront process efficiencies that could deliver real savings - in productivity increases, cost and risk reductions - the implementation costs of transitioning to a new system would make the economics of change unattractive," the ASX wrote in its report.

Several respondents identified automating certain processes as a high priority, the ASX said, but many others were unable to properly comprehend how their operations would change without knowing more about the blockchain-based approach.

Others still were more wary of the nascent technology and have asked the ASX to look into alternatives should the distributed ledger replacement not prove feasible, it said.

However the ASX said there were "no significant concerns" about its blockchain plans in the market.

"Respondents were generally supportive of ASX investigating DLT [distributed ledger technology] as a potential replacement technology for CHESS," it said.

"However, there was widespread interest expressed by respondents in being provided with more information on DLT, including how it works and what its potential application to post trade processing might enable." 

The ASX reiterated that it would make a decision on the CHESS replacement at the end of this year.

The stock exchange said it would continue to consult with market participants over the rest of the year. It said more than 400 individuals had so far been consulted within 90 presentations to the market, and it had received 36 submissions to last year's consultation paper.

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