The Sydney Stock Exchange (SSX) has confirmed its project to build a public blockchain platform that will drastically reduce settlement times of trades and equities.
The Sydney Stock Exchange is pressing ahead with a new blockchain settlement system that will position itself as a low cost alternative to the current clearing and settlement system delivered by the Australian Securities Exchange (ASX).
The project was initially announced in May to attract venture capital and private equity funds to exit their investments by looking to list on the SSX instead.
The blockchain project is expected to complete in early 2018. Sydney-based blockchain startup Bit Trade Labs will help as consultants with the project which will ultimately see settlement times reduced from four or more days to an instantaneous transaction.
Loretta Joseph, SSX director of market development confirmed recent developments while speaking at the SINET 61 conference in Sydney yesterday. According to ZDNet, Joseph said that the project took off in response to the monopoly held by the ASX in the clearing and settlements infrastructure in the country.
This provides the ideal opportunity for my little exchange to develop its own clearing settlement registration function. It means that I can take control of my own destiny rather than relying on my own competitor.
While the project has been in development for over a year, recent changes to Australian Clearing Competition laws has accelerated SSX’s development of its ledger with the government encouraging competition in the industry.
Furthermore, Joseph sees Australia gaining a global edge in the blockchain space due to an innovation-friendly regulator and government.
We have one regulator and that regulator is very supportive of technology change and we have a government that has an innovation agenda. Australia is right in a sweet spot to drive this change.
The ‘innovation agenda’ referred to by Joseph goes back to a comprehensive policy release titled “Australia’s Fintech Priorities” earlier this year. A notable excerpt from the policy statement pointed to the elimination of the goods and services tax (GST) from digital currencies like bitcoin. In May 2016, bitcoin got that tax break.
Choosing a Public Blockchain
Unlike its competitor ASX which is experimenting a closed blockchain-based settlement system developed by New York-based industry firm Digital Asset, the SSX will implement a public ledger, much like the bitcoin blockchain.
Joseph has previously stated:
The banks [and the ASX] are effectively trying to build an intranet. If we put a control around who would come into [the internet] and who can’t, we wouldn’t have the internet today.
Joseph is also the chair at the Australian Digital Currency Commerce Association (ADCCA), which she revealed will review Australia’s regulatory landscape in order to ensure that the laws are technology-neutral. As things stand, legislation only covers ASX’s existing settlement system, further pointing to the monopoly of Australia’s biggest securities exchange.
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