In the world of clearing and settlement, blockchains can be used to enable same-day issuance and automated, paperless peer-to-peer processing.
As it stands, the ASX process involves several manual reconciliation processes on a bespoke and aging infrastructure that does not easily connect to global technological changes.
The ASX, in partnership with Digital Asset Holdings of New York, of which it owns 6%, plans to replace the entire CHESS platform – from stock trading to the register of holders and all price data in real time – by a closed and authorized blockchain. networks.
The idea is to prepare for the arrival of contracts written in computer code, but also to speed up settlement and compensation times for investors and to establish clear and historical databases.
Problems for engineers, technicians
Corn, as revealed by The Australian Financial analysis Monday, these workflows are individually huge and pose challenges for engineers and technicians trying to deploy the new program without disrupting the billions of trades that take place on the exchange every week.
What’s special is that Digital Asset Holdings, which provides the DAML smart contract language on which the new platform is built, doesn’t seem to have as many problems with its other offshore clients.
Deutsche Borse is also working with Digital Asset Holdings to deploy a complete digital value chain from issuance, trading, clearing and risk management, to settlement and custody.
But rather than rewrite each function at a time, the German exchange is moving forward in stages.
In December, the German giant processed its first paperless securities through its digital central register, which is linked to the core European post-trade infrastructure.
This central ledger is powered by decentralized networks and eliminates the paper certificate process that has long been a staple of German finance.
The next step is to expand support for same-day issuance and paperless processing of digital instruments for all asset types for up to 80% of German investors. This next step is scheduled for mid-2022.
Another Digital Asset Holdings client – Hong Kong Exchanges and Clearing – aims to solve the time zone issues it faces every day when settling Chinese trades made by US and European investors.
As it stands, mainland China has a same-day settlement cycle, while Hong Kong runs a T+2 settlement cycle, which means investors have to rush to clear within a four-hour window. and hope that their transactions will be settled.
The HKEX Synapse project aims to eliminate sequential processes and develop a single source of truth for security settlement using BAML and blockchain technology.
While the ASX on Monday confirmed the delay and admitted a “high probability” that it will miss its activation date in April next year, market watchers are still puzzled as to why the CHESS replacement project launches as a giant banquet instead of smaller, manageable course.