According to the Australian Securities Exchange (ASX) recent announcement, it has officially postponed the rollout of the blockchain infrastructure plans to replace its prevailing system for processing equity transactions. ASX states that now it will release the project, the replacement for the CHESS (Clearing House Electronic Sub-register System) in April 2022.

The report highlighted the number of reasons for the change, including the COVID-19 outbreak, accommodating changes asked by stakeholders, and providing a larger window of opening for development. The aggregate impact of these considerations has introduced a new date of release in April 2022, i.e., a one-year delay from its most recent timetable. Talking about ASX, it has constantly been working since December 2017 on the transition from the CHESS system to the blockchain technology.

What will New CHESS System Bring for all?

Peter Hiom, ASX Deputy CEO, said: “ASX has undertaken a comprehensive, risk-based approach to the replan of the CHESS replacement project. We have listened to the diverse views of stakeholders and accommodated feedback on timing, user readiness, and changes to functionality.”

He further mentioned the services and enhanced functionalities of the new CHESS system and stated that the “CHESS system would deliver existing services, new and enhanced functionality, high availability, reliability, and performance and will underpin Australia’s financial markets for the next decade and beyond.” As regular industry-wide engagement and collaboration are critical to the CHESS replacement project, according to Peter, ASX remains committed to working constructively with all stakeholders to ensure that they deliver a viable solution that balances the interests of the whole market.

ASX users urge to Postpone Blockchain Project

The CHESS schedule has been under review since March, when ASX announced that it would undertake consultations in June on the deployment due to the pandemic.

Computershare, the Australian stock transfer company, has put pressure on the ASX during the consultation period, asking the exchange for a two-year delay. Moreover, Tony Cunningham, founder of CPS Capital, also suggested that a delay might be appropriate to clarify how blockchain technology would work for the share registry and broking at ASX.

ASX and Blockchain Advancements

ASX has been working long on the transition to blockchain since December 2017. In May 2019, ASX released the first code for its replacement app development tool based on blockchain technology in May 2019. It was a Customer Development Environment platform, developed in partnership with United States-based Digital Asset Holdings. In October 2019, the Australian subsidiary of market operator Chi-X called on the Australian Competition and Consumer Commission (ACCC) to investigate the possible effects of blockchain technology on trading activities.

In March 2020, it was reported that ASX has delayed its transition to the blockchain, due in part to uncertainty around the impact of the global COVID-19 pandemic and announced a new go-live date for April 2021. Apart from these, amid the COVID-19 outbreak, blockchain technology is widely being used in many fields across the world. In fact, the ongoing pandemic has boosted the adoption of technology to a greater extent.

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