ASX Limited has pushed back the earliest date at which the blockchain-inspired replacement for its CHESS system will go into operation.
The operator of the Australian Securities Exchange today revealed it had decided to push the target go-live date for the system from the fourth quarter of 2020 back to March-April 2021.
The decision came following a public consultation on the rollout of the system, which will be based on distributed ledger technology (DLT) developed by Digital Asset Holdings, of which ASX is a part owner, and provide post-trade services.
The exchange operator said it had received support for much of its proposed Day 1 functionality for the new system, but would push the roll out of some planned features back. Those features included a common investor number, settlement message enhancement and settlement in foreign currencies.
“While there was continued widespread support for delivering new scope on Day 1, respondents questioned whether the proposed implementation window of Q4 2020 to Q1 2021 was achievable given the significance of the technology change and the range of new scope being introduced,” a paper released today by ASX said.
ASX said that most respondents had not objected to a single cutover date for the CHESS replacement.
“Several respondents noted the possible risks involved, particularly with regard to ensuring all users are ready by the go-live date,” ASX said.
“A few supported a more phased implementation approach. ASX acknowledges this feedback, but remains of the view – informed by previous experience transitioning critical market infrastructure systems - that the single cutover weekend is the most appropriate solution and is lower risk than other alternatives such as running multiple systems in parallel.”
Although rolling out the new system for post-trade services remains ASX’s key focus, the exchange operator has indicated it is interested in potential broader applications for blockchain technology.
ASX CEO Dominic Stevens last month said that DLT could be employed for the settlement of bonds or of “other asset classes that financial institutions still manage on legacy technology and with manual processes”.
“These represent another large potential opportunity,” the ASX CEO said. “And if all of these improvements were based on a common technology, this should allow our customers who span these different markets to simplify their businesses even further.
“After almost three years of intense research and development we can see the benefits of a DLT system to the financial services industry. It is also clear that it’s not just financial services, but any industry that could benefit from the availability of real-time source of truth information.”