VMware began to create a blockchain system for the Australian exchange

2019: The beginning of creation a blockchain system for the Australian exchange

At the end of August, 2019 the operator of the Australian stock exchange of ASX announced the conclusion with VMware of the agreement under which the American producer of means of virtualization will participate in creation of a blockchain platform which will replace a recording system, settlement and clearing calculations of Clearing House Electronic Subregister System (CHESS).

VMware joined Digital Asset company which was attracted as the contractor of the project earlier. The tripartite memorandum of understanding was concluded.

VMware began to create a blockchain system for the Australian exchange ASX

According to the agreement, its participants will develop the application replacing CHESS and also will provide support of the open DAML programming language (it is used for development of blockchains-applications) and will provide the corresponding infrastructure with the subsequent its service.

This infrastructure as speak in ASX, will allow to create new financial services and to develop innovations, not only connected with settlement and clearing activity.

The CEO of Digital Asset Yuval Rooz noted recently that the ASX project "quite difficult", considering that they work on replacement of "all principles of functioning of the Australian clearing center" and "events of all lifecycle of the Australian ordinary shares".

ASX decided to replace the CHESS system as it is started more than 25 years. In it actions for the amount about AU$2 trillion are registered and transactions for the amount of AU$5 billion are processed - it is about 300-500 transactions and about 1500 messages.

CHESS is for banks and brokers the central link when they exchange trade information. They work with the copy of a system that strengthens load of ASX therefore the stock exchange operator decided to use a blockchain to simplify interaction and to make it the most transparent.^[1]

2017: Beginning of implementation

On December 7, 2017 the operator of the Australian stock exchange of ASX announced implementation of a blockchain after testing of technology within nearly two years.

ASX replaces with a solution blockchain  a recording system, settlement and clearing calculations of Clearing House Electronic Subregister System (CHESS), expecting to cut down at the expense of it expenses of clients. Outdated CHESS is started in the 1990s.

Since January, 2016 the American blockchain startup of Digital Asset Holdings is engaged in development of a new system. Almost two years' testing convinced ASX of reliability and convenience of new development. Implementation of a blockchain can accelerate transactions, it is cheaper and simpler to make them for clients, are sure of ASX.

The Australian exchange implements a blockchain for cost reduction

Testing of the CHESS blockchain platform in which it is going to involve clients of the exchange will begin by the end of March, 2018, ASX reports. Terms of final commissioning will depend on consultations with major shareholders, Reuters reports.

We consider that use of the distributed register instead of CHESS will help our clients to develop new services and to reduce costs. It will deliver Australia in vanguard of innovations in financial markets — the CEO of ASX Dominic Stevens said.

He added that the company thought of updating of CHESS even before origin of a blockchain. Stephens did not call expected expenses on system implementations.

The agency notes that this project does the Australian stock exchange became one of the first largest financial platforms where will use a system of accounting of calculations on the basis of a blockchain. Many banks and financial institutions in recent years increased investments into this technology in hope that it will allow to simplify processes of back offices and to cut down expenses here.^[2]

2016: Testing of a blockchain

On January 22, 2016 in the stock market it was announced the first implementation by similar to a technology blockchain for the purpose of the organization of the stock trading of the public companies.

The ASX company, the operator of the Australian stock exchange of the same name, announced investment of $10.4 million into a blockchain startup of Digital Asset Holdings and the conclusion of the contract with it for updating of infrastructure of marketplace. There start of the distributed register similar to a blockchain, for trading in securities of the public companies is planned.

The Australian stock exchange will implement similar to blockchain technology for the purpose of the organization of the stock trading of the public companies

Due to new technology the exchange is going to cut down expenses, to accelerate transactions and to make them safer for the clients.

The technology of the distributed register will help to give a single opportunity for cost reduction, time and difficulties in the post-trading environment of the Australian stock market — the head of ASX Elmer Funke Kupper says. — Besides, it can stimulate development of innovations of ASX and other service providers for issuers, investors and intermediaries.

ASX purchased 5% of authorized capital of Digital Asset and acquired the right to increase the share in the future and to appoint the representative in Board of Directors of the company. CME Group,  Deutsche Borse, ICAPb Depository Trust & Clearing and other companies also invested in a startup which is directed by the former top manager of JP Morgan Blythe Masters. In total the company attracted $52 million.

The stock exchange operator will invest in initial stage of development of blockchain technology for the marketplace. The company notes that the post-trading solutions Digital Asset will be able to conform to normative and operational standards and also standards in the field of security of transactions which are applied in the Australian financial markets.

Earlier the Nasdaq exchange began to test blockchain technology for the stock trading of private companies. The first transaction by means of a new solution was made in December, 2015. Other stock exchange operators, including Deutsche Boerse and the London Stock Exchange, integrated with financial services providers and IT giant for creation of the platforms and applications using technology of a blockchain notes Reuters agency.

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