Australian Securities Exchange Delays Transition to Blockchain Due to Coronavirus

The Australian Securities Exchange (ASX) has once again postponed its transition to the blockchain, as the impact of the global coronavirus pandemic is still unclear.

In an announcement released on March 25, ASX revealed that it was rescheduling its blockchain implementation due to the ongoing crisis, as well as issues considered before the outbreak.

In June, the exchange will therefore seek user input to introduce a new go-live date — which had been set for April 2021 until now.

Impact of pandemic-driven volatility is already visible

According to the reports, since December 2017, the ASX has been developing blockchain infrastructure which will replace its existing system for processing equity transactions called the Clearing House Electronic Subregister System (CHESS).

Delaying the implementation once, the ASX notes that the pandemic and its economic impact now places further restrictions on its development and readiness activities:

“In recent days, ASX has received further feedback about the ability of users to focus on the CHESS replacement project during this period of heightened volatility and activity levels. With many firms in the industry, including ASX, operating with a large proportion of staff working from home, the ability to participate in coordinated readiness activities later this year is unclear.”

By delaying the finalization of a new implementation schedule until June, ASX states that it hopes to be in a position to better analyze the implications of coronavirus for its operations.

The exchange maintains that even before the outbreak, over the past three years it has received controversial feedback from market users on the functionality and timing of the CHESS replacement system: some users have been supporting the delay, while others would like the project extended to give everyone enough time to get ready.

While CHESS replacement is being delayed, ASX asserts that it remains committed to a target launch date of July 2020 for its opening of an Industry Test Environment (ITE) for developers.

In conclusion, the exchange’s deputy CEO Peter Hiom has said:

“ASX remains fully committed to CHESS replacement. We continue to progress the project, including system development and testing, supporting back office software developers [….] the investments we are making in the new system and in distributed ledger technology are for the long-term benefit of the financial services industry and the Australian economy.”

ASX’s blockchain advancement

Australian Securities Exchange released the first code for its blockchain-based replacement app development tool in spring last year — a Customer Development Environment platform, created in collaboration with United States-based Digital Asset Holdings.

In October, the Australian subsidiary of market operator Chi-X turned to the Australian Competition and Consumer Commission to research the possible influence of blockchain technology on trading activities.

At the time, Chi-X Australia said it had doubts about the new blockchain CHESS replacement system giving Australian Securities Exchange an unfair advantage. The company believed that the new system should be regulated, adding:

“There’s a substantial moat around the ASX clearing and settlement business… And the CHESS replacement project is perhaps making it bigger.”