Speculation arose that Australian markets operator ASX (Australian Securities Exchange) could potentially review its investment and foray into embracing blockchain or distributed ledger technology for post-trade solutions, after the departure of CEO Elmer Funke Kupper. However, ASX executive chairman Rick Holliday-Smith has confirmed that the ASX is committed to blockchain technology solutions.
It was earlier this year when the ASX pressed ahead with its plans to implement blockchain settlement alongside its existing CHESS clearing system in a real-world trial. Following a year of its CEO hinting that the ASX might seek to tap into distributed ledger solutions, the bourse operator followed up with an AUD $14.9 million investment for a 5% equity in New York-based blockchain startup Digital Asset Holdings.
While former CEO Elmer Funke Kupper was a big enthusiast and proponent for a blockchain-based settlement solution for the ASX, analysts noted that a new CEO might look toward a new direction for the ASX.
As revealed by The Australian, Nathan Zaia, an analyst for prominent investor publication MorningStar told the publication:
A new CEO might take the view that we will wait and see if someone comes up with something and whether it is worthwhile, but in the meantime [they] continue what they are doing.
What the ASX is currently doing is use the Clearing House Electronic Subregister System [CHESS], the technology that former CEO Funke Kupper was looking to overhaul with the implementation of a blockchain-based settlement system.
Notably, the ASX currently earns just under 10 percent of its revenue at AUD $55 million, as a direct result of using its CHESS system in its role as a clearing house for equity trades.
Funke Kupper has previously claimed that switching over to blockchain technology is a “once in a 20-year opportunity,” stating at the time:
We’re thinking about whether there are smarter ways to do things – to remove a lot of administrative costs and reconciliation costs from the back end of investment banking and broking, and this is where blockchain could be potentially quite helpful.
Funke Kupper quit his post as CEO of the ASX recently after allegations that Tabcorp, the gambling giant where he was previously CEO had paid $200,000 to the family of Hun Sen, Cambodia’s leader, in order to pursue an investment in the country.
While the ASX searches for a replacement of its currently vacant CEO seat, ASX executive chairman Rick Holliday-Smith has assumed Funke Kupper’s responsibilities in the meantime.
Committed to Blockchain
Despite the speculation that the ASX may review its investment in Digital Asset and blockchain technology as a whole after former CEO Funke Kupper’s exit, its executive chairman has played down such speculation, insisting that the ASX is encouraged by blockchain technology.
According to The Australian, he stated:
The ASX Board is committed to the development of distributed ledger technology. It offers a unique opportunity for Australia to be a leader in the assessment of innovative market solutions.
As Australia’s biggest stock exchange, the ASX was the first prominent exchange in the world to court and implement blockchain technology for post-trade settlements in a bid to replace existing legacy systems which sees securities trading take multiple days before settlement.
A new distributed ledger developed by Digital Asset will co-exist alongside the existing CHESS system during an initial phase of 6 to 12 months. Following the trial, a final decision will be taken in 2017 with an assessment of the benefits and implications of blockchain technology in 2017.
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Last modified: March 4, 2021 4:47 PM