ASX Brokers Are Spending Millions to Adapt to the New Blockchain-Based Upgrade

July 21, 2021, 12:00 PM AEST - 1 week ago

It seems stockbrokers are having a rough time adapting to the high cost of the new upgrade to the Australian Securities Exchange’s (ASX) broker platform, CHESS (Clearing House Electronic Subregister System).

During a Senate economic committee hearing, Judith Fox, CEO of the Stockbrokers and Financial Advisers Association (SAFAA), said the implementation of blockchain technology had resulted in elevated costs for the group’s members as they try to adapt to the new trading platform.

Many of our members are spending millions of dollars in order to be able to interact with the new distributed ledger technology [DLT] that the ASX is implementing.

Judith Fox, CEO, SAFAA

The ASX, which regulates Australia’s A$2.5 trillion sharemarket, partnered with Digital Asset in 2016 to develop a prototype based on blockchain technology.  The new system runs on the VMWare blockchain and uses the DAML smart contract language.

The project has been delayed on various occasions to allow participants and regulators to adapt to the volatility of trading early in the coronavirus pandemic, but it should be fully live in April 2023.

Higher Cost of Messaging

The platform creates a “single source of truth” through blockchain technology. In the previous version of the ASX, messages were sent back and forth creating multiple records of ownership.

Now, brokers who use the messaging function may have to pay higher costs associated with the ASX’s upgrade, depending on how they use it. “This was a change that people requested,” a spokesman told the Australian Financial Review newspaper.

This will be primarily due to the manner in which they connect, the features they wish to use, or their need to integrate the new system into their downstream environments. Customers have choice about how they wish to interact with the new CHESS system. The choices they make will determine the costs.

ASX spokesperson

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