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Australian Securities Exchange Signs MOU to Transition to Distributed Ledger Technology
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As of August 26th 2019, the Australian Securities Exchange (ASX) has signed a three-party Memorandum of Understanding (MOU) to transition to Distributed Ledger Technology (DLT). The major exchange expects to be utilizing DLT by the spring of 2021.
The Australian Securities Exchange Using DLT Explained
The ASX currently manages AU$2 trillion in registered equities and features an average of AU$5 billion processed each day.
Now, the ASX has decided to transition to DLT. ASX has signed an MOU with fintech firm Digital Asset and VMware to transition its current exchange platform onto DLT.
The exchange developed and currently uses the Clearing House Electronic Subregister System (CHESS), which is an electronic book entry register of holdings of approved securities which facilitates the transfer and settlement of share market transactions.
Australian companies that are listed on the ASX are obliged to establish a CHESS subregister, and all equity securities are held through CHESS.
CHESS is precisely what the ASX wants to move to DLT.
According to ASX deputy CEO Peter Hiom,
“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.”
The new platform began development in 2015, and is said to already be 30-40% complete in its mission to replace CHESS.
ASX is leveraging Digital Asset’s open-source smart contract-focused language DAML.
The news comes as security tokens continue to gain traction across the globe.
Earlier this month, the MERJ exchange announced the world’s first regulated security token listed on a national stock market.
So far, the nascent security token industry has compliantly raised nearly $1 billion, with the anticipation of the U.S. SEC’s Reg A+ to increase that number and unleash the much-hyped added liquidity of security tokens.
Equity, real estate, investment funds, and even fine art have been tokenized in a regulatory compliant manner.
What do you think about the ASX making the transition to DLT? Will other securities exchanges follow suite? Let us know what you think in the comments section below.
Image courtesy of the ASX.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
