The Australian Securities Exchange (ASX) has confirmed that it is to become the world’s first global market to use blockchain technology to clear and settle trades.

The distributed ledger will replace the outdated Clearing House Electronic Subregister System, also known as CHESS, that ASX currently use. Even though ASX state that is continues to be a robust and reliable system, they are taking advantage of the opportunity to replace CHESS with a next-generation post trade platform, a statement by the exchange reads.

Since January 2016, the Australian exchange has been working with U.S.-based blockchain startup Digital Asset Holdings to create and develop a new system. The decision to replace CHESS comes after the successful development and testing. The testing also passed two independent third party security reviews of the blockchain software used.

“The testing confirms ASX’s confidence in the functional, capacity, security and resilience capabilities of DA’s application of DLT to meet the needs of Australia’s financial marketplace and maintain the highest regulatory and operational standards,” the release said.

The proposed transition is expected to take place in March 2018.

According to Dominic Stevens, ASX managing director and CEO, he said that the move to the distributed ledger ‘will put Australia at the forefront of innovation in financial markets.’ Blythe Masters, Digital Asset CEO, stated that the move ‘delivers the first meaningful proof that the technology can live up to its potential,’ adding:

“Together, DA and our client ASX have shown that the technology not only works, but can meet the requirements of mission critical financial infrastructure.”

This is a significant endorsement from Australia’s stock exchange to implement the use of blockchain technology for the clearing and settling of trades. In order to provide deliver an effective system, ASX consulted with customers, share registries, software vendors, other exchanges, and industry associations.

“We’ve given over 80 DLT system demonstrations to more than 500 attendees, and conducted over 60 CHESS replacement workshops for more than 100 organisations from the global financial services industry,” said Peter Hiom, ASX deputy CEO.

The introduction of this technology in clearing and settling will cut the cost of transactions, making them faster and more secure. It also eliminates the need for a middleman, which traditional banks rely upon. So much so, that Wall Street bank, Goldman Sachs believes that using distributed ledgers in stock trading could help the industry save $6 billion annually on a global basis.