ASX May Push Ahead with Blockchain CHESS Replacement Sooner Than Expected Under Market Pressure

The Australian Securities Exchange has announced that an “overwhelming majority” of market participants are prepared to meet the revised start date of April 2022 for the launch of the new blockchain-based system that will replace CHESS, the current system used to settle share transactions.

Data released by the ASX indicates that over 90 percent of CHESS users are ready to meet the proposed date of April 2022, with ASX experts now reviewing consultation feedback. 

The launch of the blockchain-based replacement system, which was delayed in June 2020, will rely on heavy industry-wide testing over Q4 2020 in order to ensure that it is able to meet market demand. The ASX has stated that it is currently working on assessing feedback provided by CHESS users in order to meet the new implementation timetable.

Feedback from current CHESS users received by the ASX  reveals that 88 of the 96 CHESS users have provided submissions detailing their readiness to adopt the new blockchain-based settlement system, with 91 percent stating that they are able to meet the April 2022 go-live date.

Blockchain Technology Beats Legacy Clearinghouse Systems 

CHESS is the underlying system that performs clearing, settlement, asset registration in the equity market and, at the time of launch 25 years ago, was a world-leading digital equity management platform. As the underlying system that performs critical tasks in Australian equity markets, the ASX has recognized blockchain technology as a highly effective solution that will “provide a broader range of benefits to a wider cross section of the market.”

While the ASX has not yet announced a final decision on the go-live date of the new system, ASX chief executive Dominic Stevens has stated that the blockchain-based CHESS replacement system has “taken on even greater significance” due to the need for “digitisation and straight-through processing” revealed by the ongoing COVID-19 pandemic.

“The CHESS replacement project has involved the most interaction ASX has ever undertaken with the market”

The launch of the blockchain-based CHESS solution will represent one of the largest strategic conquests for blockchain adoption, legitimizing blockchain and distributed ledger technology as a superior means of tracking, registering, clearing, and settling assets in equity markets.