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The ASX is now a blockchain stock, of sorts, as it swaps its software over to distributed ledger technology.

The market operator (ASX:ASX) will replace CHESS (Clearing House Electronic Subregister System) with blockchain software to record shareholdings and manage the clearing and settlement of equity transactions.

Blockchain is a technology that provides a public ledger of transactions used as the foundation for digital currencies such as Bitcoin. Each “block” is like a bank statement that is connected to other blocks to form a chain.

The transition is expected to start next year, with the timing to be decided around the end of March.

“[CHESS] was world-leading when introduced in the 1990s,” it said.

“It continues to be a robust and reliable system. ASX is now taking the opportunity to replace CHESS with a next generation post-trade platform using contemporary technology.”

The ASX has been consulting on this decision for more than a year, and two years building and testing a prototype with Digital Asset, of which it owns 8.5 per cent, that could work at scale.

“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. Together, Digital Asset and our client ASX have shown that the technology not only works, but can meet the requirements of mission critical financial infrastructure,” said Digital Asset CEO Blythe Masters.

ASX managing director and CEO Dominic Stevens says the move puts the market operator “at the forefront of innovation”.

Other exchanges that are flirting with blockchain are the Nasdaq, London, Tokyo, South Korea and the tech savvy Estonians.