ASX blockchain investment rises to $38.5 million in 2017

The Australian Securities Exchange (ASX) has revealed plans to increase investment in distributed ledger technology (DLT) as it seeks to become the first exchange in the world to use DLT for post-trade services.

The Australian Stock Exchange has invested 2030万澳元in DLT research and development so far, and today CEO Dominic Stevens announced that this figure will increase to 5000万澳元(USD 38.5 million) by the end of this year.

The ASX is one of the backers of blockchain startup Digital Asset Holdings (DAH), so the funds will be used to invest in the company's DLT projects, as well as other infrastructure investments.

In a speech on the exchange's financial status and performance, Peter Hiom, chairman of the ASX's DLT platform, said that after a series of tests, the company is confident that its investment will bring a faster and more scalable solution that may even outperform the existing Clearing House Electronic Subsidiary Registration System (CHESS) platform.

Hiom said:

Together with our technology partner DAH, we have made great progress in building basic settlement capabilities for the cash market.

The ASX announced in its presentation that total revenue last year was A$387 million, up 2.8 per cent, with net profit after tax of A$219 million.

Example Demonstration

The Australian Stock Exchange plans to achieve cost savings by adopting DLT, so they participated in DAH's $60 million Series A financing round. Last year, they made a big bet on replacing the existing CHESS platform with DLT.

Hiom explained that they worked with DAH to create a “demonstration example” that was intended to “vividly demonstrate the application possibilities of DLT.”

ASX used this example to gain a deeper understanding of its clients’ business needs.

According to documents received by CoinDesk, the DLT example collected data from 350 participants in 50 presentations and 40 workshops.

A review of the findings will be published later this quarter.

Stevens expects the ASX to spend three to six months analyzing the data and ultimately deciding whether it is useful for its early blockchain deployment.

Both Hiom and Stevens agreed to formally evaluate whether to upgrade the CHESS platform with DLT by the end of this year.

Hiom said:

There are many people and organizations currently studying the best options for DLT development.

Blockchain Competition

For many years, the ASX enjoyed a monopoly under the protection of the government. However, last year they found that this could no longer continue.

The Australian government is likely to open up the market to competition, so the ASX has begun its own blockchain experiment.

However, when asked about potential competitiveness, Stevens only euphemistically said that they have no such concerns at present.

Producing a blockchain product that works in the interests of all involved is time-consuming and labor-intensive. However, Stevens did not mention how much effort it takes to be a pioneer in the development of a new technology.

Stevens concluded:

Assuming that there are competitors who want to get involved in the blockchain field, I think if it were me, I would wait and see for a while and take action after everything has settled down.