ASX jumps on board the blockchain train

ASX jumps on board the blockchain train

It’s not just Bitcoin making waves with its phenomenal price surges and futures contracts. Blockchain, which is actually the underlying technology for Bitcoin and other cryptocurrencies, has taken another step on its road to global adoption.

Australian Securities Exchange (ASX), the country’s main stock exchange, announced on Thursday that they will be using blockchain technology to process equity transactions.

This is a groundbreaking move, a sentiment echoed by ASX deputy chief executive, Peter Hiom:

“We're the first exchange to consider taking this step.”

Blockchain has become one of the major buzz words in range of industries, not just in crypto. This distributed ledger offers users a secure and cost-effective way to store records and transactions. These records cannot be changed or deleted.

Because of this, it is seen as a great tool for banks and financial institutions. However, it can be used in many different industries.

In the case of ASX, Digital Asset Holdings will provide the technology. The latter is a start-up run by Blythe Masters, a banker who previously worked for JPMorgan Chase & Co.

ASX has invested at least $14.9 million in the start-up. With additional investments from CME and JPMorgan, Digital Asset Holdings has raised more than $152 million.

As blockchain’s potential becomes more widely recognized, companies will have to investigate if it is a viable option for them in order to stay ahead in the game.

Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, had this to say on the latest adoption of this technology:

“It surprises me that ASX is doing it ahead of other big exchanges.” He added that, “when the technology becomes available, you have to embrace it.”

ASX had previous plans to upgrade their existing Clearing House Electronic Subregister System, known as Chess, which they have been using since the 1990s. However, according to Hiom, blockchain would be able to offer lower costs to clients and would allow for the launch of innovative services from the real-time post-trade data.

This new blockchain-based system would offer no access barriers to non-affiliated market operators and clearing and settlement facilities.

Even though this is something completely new for ASX, switching to blockchain won’t break their budget.

“The costs in rolling out this system I don't think are too dissimilar to us having rolled out a traditional system,” said ASX chief executive, Dominic Stevens.

Masters shared her excitement for the partnership:

“After so much hype surrounding distributed ledger technology, today's announcement delivers the first meaningful proof that the technology can live up to its potential.”

No launch date has been provided for this new venture, but it could be as soon as March next year.

Author : Jack Dean