Australian stock exchange (ASX) has announced that it will use the blockchain-based technology to clear and settle trades. The Australian Securities Exchange will replace its existing clearing system with the blockchain technology used behind Bitcoin. Reports suggest that ASX has been developing and testing the new system for more than two years.
With the launch of the new system, the main stock exchange from Australia wants to cut down the transaction costs and also make it more secure and quicker. The date on which the existing system will be transiting to the new technology is expected to be revealed in March 2018. Dominic Stevens, the chief executive of ASX said that the shift to the distributed ledger technology aka blockchain will make the country pioneer of innovation in financial markets.
Through blockchain technology, one can record data related to the digital ledger of transactions, contracts, agreements or anything that needs to be recorded or verified independently. This ledger differs from the other recordings as it is not stored in just one computer. Rather, the information can be easily accessed through thousands of computers around the globe. The US-based blockchain start-up Digital Asset Holdings has been working with ASX to develop the new system since January 2016.
Ledger Technology To Live Up To Its Potential
Blythe Masters, the chief executive of the start-up company said that after so much hype about the distributed ledger technology, the recent announcement indicates that the technology has potential and is living up to it. According to the chief market strategist for CMC Markets, Sydney, Michael McCarthy, it is possible to save tens of millions of dollars through this new technology.
McCarthy further added that the lower costs will be advantageous for investors and traders as in the long term they would be required to recruit less staff to complete the settlement process. The blockchain technology will be replacing the CHESS (Clearing House Electronic Sub-registry system) system currently used by ASX which requires verification of each trade.