ASX delays blockchain clearing system

The ASX argues its new blockchain-based clearing system will simply replace its ageing CHESS system. Picture: NCA Newswire

The ASX has delayed the introduction of its new blockchain clearing and settling system for 12 months, pushing it back until April 2022.

Covid-19 and allowing more time for users to get their houses in order were cited as the major reasons for the delay.

The planned trials of the system have also been delayed until December to again give participants more time.

The move should also placate the naysayers like Computershare and Link who have consultants on the payroll building a case against the change. They are argue the new system will increase the ASX’s control over many activities linked to share trading, including proxy voting.

The ACCC is not a fan of monopolies extending their market power so it will be looking at developments.

But from its perspective, the ASX says it is simply replacing ts 25 year old CHESS operating system with a new blockchain-based service.

The CHESS replacement system will have the option of being a distributed ledger technology (DLT) which will revolutionise share trading in Australia by providing real time certainty over clearing systems.

The so-called blockchain system is being examined across the world as the new way of transacting business and, like any new system, it comes with uncertainty.

On paper the system would slash costs and improve market efficiency, which sometimes comes at the expense of intermediaries who can no longer establish a reason for being.

That explains why the registry companies are not impressed because an open system allows new entrants which could impact their own business.

Not surprisingly, the ASX says it is simply replacing an old system with a new one with no designs on data collection or increased market power.

It has worked on this project for some five years or more and now another year longer before it is introduced.

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