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ASX, Digital Asset and VMware collaborate on DLT

Maria Nikolova

ASX plans to provide its DLT offering with the support of Digital Asset and VMware.

The Australian Securities Exchange (ASX) today announces the signing of a three-party memorandum of understanding (MOU) with Digital Asset and VMware to work together on distributed ledger technology (DLT) initiatives in Australia and New Zealand.

Under the principles in the MOU, ASX intends to provide its DLT offering with the support of Digital Asset and VMware. This will include the development of the application to replace CHESS, the support of DAML (the open source smart contract programming language used to build distributed applications), and the provision and support of the distributed ledger and associated infrastructure, which delivers ASX’s data privacy, confidentiality and security requirements at greater scale.

ASX remains initially focused on the replacement of CHESS, but the partnership will strengthen its ability to support the financial services industry using the infrastructure to create new services and innovations beyond clearing and settlement. It will also enable ASX, Digital Asset and VMware to work together to provide and support DLT solutions to other customers in Australia and New Zealand.

Having signed the MOU, ASX, Digital Asset and VMware are now working on full legal documentation.

In the meantime, software for the new system to replace CHESS is being progressively deployed within ASX’s Customer Development Environment, where customers and their service providers have begun exploring the clearing and settlement functionality of the new system.

Peter Hiom, ASX Deputy CEO, said: “This new partnership is a very positive development that will help us support a wider range of DLT solutions developed by the industry. It confirms our belief in the potential of DLT as we remain on track to deliver the CHESS replacement system in March-April 2021.”

ASX reminds that while CHESS is a stable and reliable system, it is over 25 years old. According to the Exchange, it is time for CHESS it to be replaced with more contemporary technology in the next few years. CHESS was an innovation and market leading when it was implemented over 25 years ago, marking the way for the dematerialisation of share ownership in Australia. CHESS continues to perform the functions of clearing and settlement for cash equities.

ASX replacing CHESS with new DLT brings greater benefits which include: greater market efficiencies through better record keeping, reduced reconciliation, more timely transactions and better quality data.

In May 2019, ASX announced that it had successfully opened the Customer Development Environment (CDE) for its new equities clearing and settlement system to replace CHESS.

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