ASX goes live with new DLT-as-a-service platform

The Australian Securities Exchange (ASX) is rolling out the second phase of its distributed ledger technology solutions offering with the launch of Synfini, a DLT-as-a-service platform that is now ready for deployment.

Synfini is a full-service blockchain technology offering that uses VMware blockchain. It will enable customers to access the exchange’s DLT infrastructure, data hosting, ledger services, and support, removing the need to build, run, and support their own environment and help address challenges around cost, complexity, and risk. 

Synfini is the next phase of the Daml sandpit environment that ASX launched in January. The sandpit allows individuals and firms to familiarize themselves with the Daml smart contracting language and begin coding and developing applications. 

Dan Chesterman, group executive for technology and data, and chief information officer at ASX, says the platform is an instance of the Daml platform, which sits on AWS in multiple availability zones and is connected to the VMware blockchain. This allows ASX’s customers and the parties they interact with to have different nodes on the Synfini platform.

“It’s a step further into the introduction of the VMware blockchain and allows for them to have different nodes with permissioned access to the data that relates to them. When we go live with customers, they can define who their parties are within their ecosystem and what rights those parties have, in a way that’s taking advantage of the VMware blockchain capability—but as a service, so we don’t have to have them managing their own infrastructure,” he tells WatersTechnology.

Each party has invite-only and permissioned access to a synchronized, real-time, immutable audit trail. Automated consent management and sovereignty of data owners ensures each party sees only the data on the ledger that they are permissioned to access. 

Synfini uses the same underlying technology as ASX’s Chess replacement but is offered as a cloud service, with the aim of providing flexibility and scalability to clients as their usage grows.

Chesterman says customers could create a development environment on Synfini using multiple nodes and data centers. They can also have a production run on Synfini once they have put their application through testing. 

One of the first Synfini clients is KPMG, which is using the platform to host a building assurance application—a “trustworthy index” for buildings—operating for the New South Wales government.

Other sign-ups include Broadridge, which is developing an application that automates and eliminates paper for off-market transfers in the equities market, and Boulevard, a digital company registry and investor relations platform that is building an ownership registry for private firms. DigitalX, a blockchain technology vendor, will use Synfini to host its Drawbridge app, a regtech solution that aims to reduce employee and director securities trading risk by automating the approval process.  

Eiichiro Yanagawa, a senior analyst at research and advisory firm Celent, believes Synfini has the potential to become a core service in the future. “It appears to be an initiative that is consistent with the significance of providing DLT platform services on stock exchanges,” he says. 

The use of DLT to create new financial markets and infrastructures is increasing, exemplified by attempts to build a comprehensive infrastructure that stores and manages corporate bonds, stocks, and other securities issued as security tokens using DLT, along with a wide range of the securities value chain, including post-trade operations, immediate settlement, custody services, corporate actions, compliance, and trade monitoring. 

Yanagawa says a possible incentive for building a securities value chain using DLT is the further promotion of straight-through processing and efficiency improvements in the securities market infrastructure to reduce the cost of securities issuance and trading. 

Another possibility is that these cost reductions will facilitate the development of new securities markets, particularly in small-cap investment and issuance, and the securitization of other assets. Yanagawa says exploring future initiatives, involving emerging tech like DLT, could also prompt more market structure firms to restructure their IT systems and traditional designs in settlement services. In the future, he says, in addition to the services that exchanges provide, their competitive advantage will depend on the underlying infrastructures used to support them.

Utility services provided by exchanges—such as scalable structure, data validation, efficient processing for pre-to-post-trade, and collocated securities transactions—will continue to multiply, says Yanagawa. “This is not only an effective use of the next-generation technology of DLT, it is also an essential factor for the healthy development of the exchange-centric capital markets ecosystem.” 

Benjamin Quinlan, chief executive and managing partner at Hong Kong-based strategic consulting firm Quinlan and Associates, says it will be interesting to see how Synfini positions itself against existing enterprise blockchain solutions, including Hyperledger, Quorum, and R3 Corda. 

“Since Digital Asset Holdings has worked alongside ASX over the past six years to develop a program that is specifically designed for securities settlement—which is a well-known area of potential disruption for blockchain—Synfini could position itself in a very powerful niche among existing players,” he says.

He adds that one notable use case is Broadridge’s application for off-market transfers in the equities market. While the infrastructure was originally designed for securities exchange purposes, he says, if Synfini can provide a more scalable service that is applicable to other financial markets players like Broadridge, it would “open the door” for wider industry participation.

ASX’s ability to offer Synfini infrastructure publicly will enable the exchange to capitalize on growing demand for DLT solutions from its network of market participants. “Not only will this allow them to externally monetize their in-house DLT capabilities developed for Chess, it also has the potential to create sizeable network effects within its ecosystem across wider use cases, which should bode well for future mass-market adoption,” says Quinlan.