Blockchain is under consideration to replace Australian Security Exchange’s Clearing House Electronic Sub-register clearing and settlement System.
The Australian Securities Exchange’s (ASX), managing director, has confirmed that blockchain is a serious candidate to replace the existing clearing and settlement system.
The Sydney Morning Herald reports that ASX managing director Elmer Funke Kupper sees the costs, timescales and complexities of the current Clearing House Electronic Subregister System (CHESS) – cut down by blockchain technology.
In noting the technology as a “once in a 20-year opportunity,” Kupper added that the ASX was actively looking to implement end-to-end efficiencies and assessing blockchain to create a viable, efficient structure that can be used by clients, investors and companies.
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.
The ASX’s use of CHESS accounts for 7 percent of the Exchange’s annual revenue, at AUD $45 million.
Kupper is looking at a complete overhaul of ASX’s current systems, even those beyond CHESS and is demanding plenty of time to do it diligently.
“We are replacing all our systems; we would like five years of peace to do all of that,” Kupper said.
The upgrade and the process to replace CHESS is identified by the Council of Financial Regulators, Australia’s principal regulatory agency, a system that it sees as a vital risk-management infrastructure for the country.
The upgrade is scheduled to begin toward the end of 2016.
Australia and Bitcoin
Australia’s regulatory authorities have generally had a hands-off approach to bitcoin, a popular cryptocurrency in the country. Late last year, Australian Securities and Investment Commission (ASIC) ruled out the need for Bitcoin exchanges requiring licenses to operate.
In a recent speech at Carnegie Mellon University, Australia, the ASIC chairman, Greg Medcraft saw blockchain as a technology with “the potential to fundamentally change our markets and our financial system.”
Bitcoin companies were recently given a hard time by Australian banks that closed several companies’ bank accounts, a series of closures that are currently being investigated by the Australian Competition and Consumer Commission (ACCC).
The possible move to embrace blockchain as the technology to power Australia’s primary securities exchange comes during a time when Australia-based Bitcoin Group Limited, a bitcoin mining operator is gearing up for the launch of the world’s first bitcoin mining IPO on November 11, 2015. The mining operator recently completed a successful ‘pre-IPO’ through an investment platform to raise funds ahead of its IPO launch next month.
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