The Australian Securities Exchange (ASX) has confirmed that Australians firms could bring in millions of dollars of savings once the exchange moves from the existing Clearing House Electronic Subregister System (CHESS) to a blockchain technology-based platform.
Presently, it is said that the average fee that large investors are charged for clearing and settlement services it at an estimated 1.2 percent of the assets. The superannuation industry acquires cost of an estimated $23 billion.
“If the value of what we can deliver by providing an enriched, real-time source of truth information to the industry ultimately allows the industry to offer new services that create only 5% incremental revenue or cost savings to end-issuers and investors, we think it’s absolutely worth pursuing,” the CEO of ASX, Dominic Stevens noted at the exchange’s full year results briefing.
Stevens noted that using distributed ledger technology will get rid of reconciliation process because participants will be able to access the right data in a short period of time without consulting the securities exchange. Furthermore, a DLT-based system will cut down on risk and expenses including complexity. Presently, there are several disparate databases and supporting, upgrading and maintaining them is costly. The usage of distributed ledger-technology will also boost development.
“By doing all of this within a highly secure environment where permissioned users have access only to the data that they are entitled to see, ASX is safely liberating the source of truth information in real-time such that it can be used by participants and other providers to build new services across the value chain,” Stevens added. “This will provide tremendous value by being a great business enabler for our customers, and a significant enabler of innovation for issuers and investors.”
In contrast to the CHESS platform which has different versions of various applications programmed in different languages on several databases, the ASX’s DLT-based system will use a standard modeling language for Ethereum-like smart contracts and will be on a harmonized database.