The Australian Securities Exchange (ASX) plans to replace its equity and settlement systems (CHESS) in 2021 with blockchain technology, following a three-party memorandum of understanding (MoU) with Digital Asset (DA) and VMware, an NYSE-listed tech firm.
As confirmed in a press release on August 26, ASX under the principles in the MoU will work together with DA and VMware to provide distributed ledger technology (DLT) initiatives in Australia and New Zealand.
The proposed initiative will not only feature the development of an application to replace ASX’s CHESS but will also include support for DAML, an open-source smart contract programming language. Per the release, DAML was created by DA for the development of distributed applications.
The exchange’s collaboration with these firms is believed to boost its support for the financial services industry, giving that the infrastructure can still be channeled to create innovations beyond the clearing and settlement system in the financial sector.
ASX initially had plans to introduce the system by next year; however, it was delayed for six months due to the fact that blockchain implementation needs much time for users’ development and testing.
The software for the new system to replace CHESS is being progressively deployed in the meantime within ASX’s Customer Development Environment.
While ASX remains focused on the replacement of CHESS, the ASX Deputy CEO, Peter Hiom, said,
This new partnership is a very positive development that will help us support a wider range of DLT solutions developed by the industry. It confirms our belief in the potential of DLT as we remain on track to deliver the CHESS replacement system in March-April 2021.
ASX first revealed its plans to replace the CHESS with blockchain in 2021 on the bid to enhance the CHESS with significant efficiencies hosted on blockchains such as faster transactions, reduced costs, and improved security.