Australia’s market operator is considering walking away from a long-touted blockchain replacement to its clearing and settlements system, and weighing up using an out-of-the-box product created for another equities exchange to meet tight timeframes for the roll-out of the project.
The ASX is also preparing to abandon a quick move onto the new system – which will replace the one introduced in 1994, known as CHESS – and instead stagger the migration of brokers, the company told market participants in a webinar meeting, according to an article by the Australian Financial Review (AFR).
The webinar, presented by CHESS replacement program director Tim Whiteley, who has since been named chief information officer, noted that while the ASX was considering non-blockchain solutions, it also continued to work on how that technology could be used in the future to support trading in new products, including digital assets.
The exchange has also launched a consultation to shift the equity market to T+1 settlement, in line with similar moves in the US next year, that would allow equities trades to settle the day after they are made, in contrast to the current system that allows for two days. The new and old CHESS systems are set to be upgraded to facilitate shorter settlement times.
Whiteley said in an interview with AFR that responses to a request for proposal on the new system provided to a handful of technology vendors was due back with ASX at the end of May. This process is expected to show the ASX whether a “product-based solution”, supplied by a large vendor with an established track record working for other large global exchanges, might be a faster and more reliable option for ASX than a complete redesign of CHESS, or redoing the existing project with New York-based Digital Asset.
This would be a backflip on the initial approach that attempted to use blockchain to build a new system untested by other markets. Any out-of-the-box solution would be amended to incorporate Australian peculiarities around share trading.