ASX Defends Blockchain Research Initiative in Light of Criticism

ASX Defends Blockchain Research Initiative in Light of Criticism

The newly-appointed Australian Securities Exchange (ASX) chief, Dominic Stevens, recently defended the company’s stake in blockchain research and development.

Also read: Big Finance Firms Now Want to Hire Bitcoiners as ‘Specialists’

ASX Blockchain To Replace ASX’s Clearing System In The Future

Dominic Stevens ASX
Australian Securities Exchange (ASX) chief, Dominic Stevens

According to the Financial Times, ASX  is steadfast towards implementing blockchain within its operations. This August, the firm recently appointed Dominic Stevens and the new ASX chief says the firm is “going through a transformation in technology.”

Currently, ASX has an 8.5% stake in Digital Asset Holdings with a $17.4 million investment. Digital Asset is led by former JP Morgan executive Blythe Masters, and the company has an array of well-known backers.

Recently, the blockchain startup has hired a “dream team” of financial executives from New York, London and Frankfurt. This includes Carol Mathis as the new CFO, who had a previous tenure as CFO of RBS.

Working with Digital Asset is a big deal for ASX as they plan to revamp the company’s 22-year-old settlement system. ASX chief Stevens explains:    

We’re working with Digital Asset Holdings on trying to get to a stage where we could contemplate replacing ASX’s clearing system.— That’s quite a project.

ASX released its annual report this summer explaining its distributed ledger technology plans and current progress. The firm completed a test run of its blockchain prototype this year and was pleased with its performance. ASX believes its blockchain has various potential applications including end-to-end operations, security and risk reduction, and clearinghouse settlement speed.

Not Everyone Is On Board With Blockchains

Peter Hiom ASX
Peter Hiom, ASX’s Deputy Chief Executive

ASX may be keen to change its system over to a distributed ledger protocol, but its clientele may not. John Fildes, chief executive of Chi-X Australia, tells the Financial Times he believes brokers would prefer the exchange choose a more traditional industry-standard procedure. Fildes said “It’s an extra cost burden not to use globally implemented systems.”

ASX recently explained to investors and media the significant differences between a public blockchain and a privatized version. The firm is leaning towards a private blockchain, a digital ledger system controlled by the company and invited parties. This is in contrast to a public distributed ledger, like Bitcoin, which is open to everyone.

The exchange will come to a final decision on the use of the technology in July 2018. ASX told the Financial Times the organization has been working with regulators and is just beginning to receive feedback from its clients. Peter Hiom, ASX’s deputy chief executive, detailed the company’s strategy, saying:

We are consulting on taking what was a prototype that we built and turned that into something much more industrial-strength.— A significant engagement with our clearing and settlement participants is about to start.

Hiom said during a speech at the 2016 Stockbrokers Conference in Melbourne the firm will “fully assess” the technology in regards to scalability, security and overall performance. This includes engaging with its customer base to “ensure the platform meets their requirements both existing and new and with regulators to ensure we continue to comply with the highest regulatory and operational standards.”

What do you think about ASX switching its 22-year-old clearing system for blockchain technology? Let us know in the comments below.


Source: The Financial Times

Images courtesy of ASX affiliated websites


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