ASX on Track for CHESS Replacement Testing

The Australian Securities Exchange (ASX) is on track to commence industry-wide testing on its distributed ledger technology (DLT)-backed CHESS replacement program in July 2020. 

The exchange greenlighted the project to replace CHESS, its equity clearing and settlement platform, with a DLT platform developed by Digital Asset Holdings in December 2017. ASX had earlier aimed for the platform to go live by the end of 2020, but since extended it to the end of its proposed timeline, to April 2021. 

ASX CEO Dominic Stevens said on February 13 during a results briefing: “We understand that replacing a complex and sophisticated 26-year-old system is a major undertaking for the industry, but it needs to be done. Much of the original CHESS has enabled customers to generate efficiencies, reduce costs, and offered new products and services. So the replacement of CHESS, in the same way, will enable innovation for the next quarter of a century. We’re very excited about the long-term benefits this can bring to clearing and settlement specifically, and to the efficiency of the securities industry in Australia generally.”

Stevens added that DLT offers many opportunities that are of interest to customers and other third parties. Some of these opportunities are developing in a range of areas, including risk management and process automation. 

While these opportunities are “exciting”, Stevens said ASX’s priority is completing the CHESS replacement project. 

Part of ASX’s overall technology-driven strategy is looking at adjacent areas where its skills and infrastructure can grow its revenue and provide new services to customers. One of these adjacent areas has to do with ASX’s DLT solution. 

“Our DLT solutions opportunity is focusing on encouraging others to innovate on our platform, be it adding valuable functionality to the cash equities market, or helping develop new DLT technologies in areas totally separate to CHESS,” Stevens said.

ASX is looking to provide training in DAML (Digital Asset’s open-sourced programming language) and to roll out a DAML partner program together with tech partner Digital Asset. 

Stevens says it should gain more traction once the exchange has completed the significant work of rolling out the core CHESS application.