Share registrars try to delay Australian Securities Exchange blockchain launch
The Australian Securities Exchange (ASX) had scheduled to launch its blockchain clearing and settlement system CHESS in April 2021. Due to COVID-19, the ASX stated in March that it would discuss this month about dawdling the CHESS rollout. Although various market participants, particularly share registrars, have resisted the platform over concerns that it trespasses on their turf. Yesterday the FT (Financial Times) reported that share registrar Computershare was urging for a two-year delay in the ASX DLT (distributed ledger technology) launch.
The FT stated: “Several ASX clients expressed concerns to the FT that the exchange could use the tech overhaul to extend its dominance in clearing and settlement into other markets, including share registry services.”
More than a year ago, it was reported that the CHESS system was the title of perhaps the first competition complaint linking to the blockchain. It is believed this is the first of many as the nature of blockchain platforms often removes the requirement for intermediaries. The latest rumblings sound similar to earlier ones. The matter is that the CHESS DLT platform’s functionality may protrude with some of the recent share registrars’ services. That’s because transaction data will be accessible on the DLT. And concerns about extended costs have been raised again.
Last year deputy CEO Peter Hiom made apparent that “we will not mandate the provision of any extra users’ data nor will we be increasing fees to pay for the CHESS replacement project.” In a factsheet for issuers issued this week, the ASX states, “ASX fees for like-for-like services will not change. ASX is not recovering the costs of CHESS replacement by charging issuers more.” Elsewhere it explains its capital expenditure budget covers the costs.
The same report also says the CHESS replacement will not eliminate the need for registrars. “Share registry services will continue to be available and play an important role with issuers. Several share registries are already working with us to enhance their offering to issuers using distributed ledger technology.” When any technology solution develops, basic functionality becomes commoditized, so there’s a requirement to provide added value services.
Apart from widespread consultations, and issuing numerous technical updates, the ASX has now made a meaningful accommodation to market participants. To receive the full benefit of DLT, organizations would operate DLT nodes. Nevertheless, this might be too big a requirement, so instead, participants can interact in more traditional ways utilizing messaging standards like ISO 20022 through AMQP and SWIFT. DLT access is free for three years, though messaging will be charged.
The platform was created by Digital Asset and made extensive use of its DAML smart contract language. ASX has made an investment of $30.9 million in Digital Asset, which has accumulated $150 million. Digital Asset associate VMWare was brought into the team more currently, and the blockchain has been shifted from Digital Asset’s ledger to VMWare Blockchain utilizing DAML.
As the ASX is the market operator or central clearing party, only the ASX can address to the ledger for the initial solution. Nevertheless, future applications not needing a central party will be distributed. Given consultations about the launch, timing commenced this month; it shouldn’t be too long before the ASX declares its new rollout schedule.