ASX Extends CHESS Replacement with Blockchain by Six Months

Australian stock exchange operator ASX said that it would extend its replacement of the CHESS system with a blockchain platform by six months.

The Australian Securities Exchange (ASX) revealed on Tuesday that it would delay the replacement of its current Clearing House Electronic Subregister System (CHESS) with a blockchain system. Thus, the new platform will go live by about six months later than initially planned. The move comes after market participants noted that the shift was complex and required a gradual transition.

ASX has published a new “scope and implementation plan” for the replacement of its current clearing and settlement system. The document says that market players have analyzed ASX’s consultation paper released in April and had supportive opinions. However, they showed “a strong interest in better understanding the potential benefits that a DLT [distributed ledger technology]-based system can offer.” The groups of market players include clearing and settlement operators, payment providers, market operators, back office technology vendors, stock registries, and brokers and custodians among others.

Brokers and investors suggested that they needed more time to get used with the distributed ledger technology (DLT), another name for blockchain. ASX has already created new working groups to help users understand the benefits of taking a node on the new blockchain system. The stock exchange operator will hold several webinars this September and October to provide further details on the new infrastructure.

The platform is developed by ASX in collaboration with New York-based fintech firm Digital Asset. ASX has acquired a minority stake in the blockchain-oriented firm.

At the end of April, ASX said that the new infrastructure should be ready between the fourth quarter of 2020 and the first quarter of 2021. On Tuesday, the new plan reveals that the platform might go live by April 2021 and that the testing would be extended by an additional six months.

“With these revisions ASX is confident that a successful market-wide implementation of the CHESS replacement system will now be achieved,” the Sydney-based stock exchange operator said in its update.