The operator of the Australian Securities Exchange is considering deploying a distributed ledger architecture to replace its mainframe-based Austraclear settlement platform for debt instrument securities, according to Digital Asset Holdings officials.
The ASX announced that it would replace its more than 20-year old Clearing House Electronic Subregister System for its equities market with a new platform that incorporates technology from Digital Asset at the end of 2017.
Given the overlapping customer base, it would be appealing to have both on the same technology for cash equities and fixed income, according to Blythe Masters, CEO of Digital Asset and who spoke at the DTCC’s third annual Fintech Symposium in Midtown Manhattan.
“Whether it would be a distinct or the same instance would still have to be determined," she added.
Masters estimated that there is roughly two-year worth of work to do before the CHESS replacement goes live.
“They have not published a formal timeline, but I think it will be more 2020 than 2019,” she said.
Upon rollout, ASX clients will have the option of communication with the new platform via ISO 20022 messages or by hosting an instance of a platform node internally.
"Early reaction from the vast majority of customers engaged by the ASX have expressed an interest in adopting a node," said Masters.
ASX clients have the option to continue to interact with the platform through messaging but would not see the same straight-through processing benefits as those who host a node, she added. "At a conceptual level, there is a desire to embrace node adoption."
To address the systemic risk associated with the platform's critical role in the market, the vendor developed its Digital Asset Modeling Language to support environments where multiple entities rely on the execution of the same information code.
Digital Asset developed the language after finding many general-purpose languages did not provide certainty of outcome or the necessary analytics. The modeling language does not permit entities to be placed into contracts where they are obliged to receive or elect something without having the ability to affirm it.
"This is to avoid things like what happened to the DAO," said Masters. "We looked at open source code initially but did not find anything that was advanced enough."
