ASX calls fintechs to test blockchain-powered replacement of CHESS

Rick Steves

Third party vendors who supply software to CHESS users as well as those organisations developing in-house systems are invited to test ITE1.

The Australian Securities Exchange has opened the first of the integrated Industry Test Environments for the CHESS replacement project – ITE1.

The distributed ledger technology platform is meant to go live in April 2023 as the new CHESS equities clearing and settlement system.

ITE1 gives CHESS users their first exposure to ASX’s external solution, which includes Digital Asset’s Daml smart contract development capability and VMware’s DLT (blockchain) platform.

Fintech firms are invited to try the new system

Third party vendors who supply software to CHESS users as well as those organisations developing in-house systems are invited to test ITE1.

The second test, ITE2, will open for market participants and other CHESS users in April 2022.

“Today’s opening is a significant step on the journey towards the go-live for the CHESS replacement system in April 2023. Together, we’ve entered a new and exciting phase of the project”, said Tim Hogben, ASX’s Group Executive for Securities and Payments who is leading the CHESS replacement project.

“ITE1 allows software providers entry into an integrated test environment, which uses Digital Asset’s Daml smart contract development capability, VMWare’s DLT (blockchain) platform and other infrastructure that underpins the new CHESS replacement system. It will generate valuable feedback for ASX on the state of the new and developing system, with software providers testing functional and non-functional workflows across all connectivity access channels”, he continued.

“We are focused on providing a rigorous testing environment for ASX and our customers. ITE1 offers a valuable learning opportunity to develop and stress test systems to the highest levels, and enhance the overall resilience of the new infrastructure. Risk management is foremost in our minds ahead of the CHESS replacement platform going live in April 2023″.

ASX’s strategy is to build an exchange for the future and deliver world-leading infrastructure to the Australian market. Opening ITE1, as part of the CHESS replacement project, is a key pillar to achieve that goal.

“There is a great deal of interest in ASX’s CHESS replacement project and the ground-breaking technology behind it. As a result, ITE1 will be closely watched by many financial markets around the world as they consider their own long-term technology-upgrade solutions”, Tim Hogben concluded.

Working on a blockchain replacement since 2016

The replacement of CHESS has been a challenge for ASX. The exchange has been working since January 2016 with its technology partner Digital Asset to examine and test the ability of a DLT-based system to underpin the replacement of CHESS.

This process led to the decision in December 2017 to proceed with a DLT-based solution. In 2019, the operator announced the system would be ready by mid-2021.

The live date was then rescheduled to April 2022 to allow CHESS users to focus on their day-to-day operational activities amid the Covid-19 pandemic.

The firm now states the project remains on track for go-live in April 2023, but earlier this year the exchange saw the resignation of Peter Hiom, who was bearing executive responsibility for the delivery and governance of ASX’s CHESS replacement project.

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