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ASX DLT Transition To Be Delayed Further Due To Capacity Upgradation

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The Australian Securities Exchange (ASX) sees a further unexpected delay in its planned transition to a blockchain-powered platform as the replacement for old system due to the massive capacity upgradation required amid the extraordinary period of heightened market activity in March 2020.

ASX was expecting to commence the official trial of the DLT-based CHESS replacement system in December 2020 and intending to go live in April 2022. ASX is working closely with the regulatory agencies such as ASIC, RBA, ACCC and Treasury, to ensure market resiliency, capacity and stability.

ASX said it had to undertake a number of enhancements to its existing CHESS system and post-trade infrastructure to provide additional capacity to accommodate the rapid uplift in volumes experienced during the COVID period.

Given the extraordinary increase in activity levels, significant additional capacity is now being planned for the CHESS replacement system to accommodate potential further increases in peak volumes from Day 1 and beyond.

During his address to the virtual AGM on Wednesday, ASX CEO Dominic Stevens said, "With the volume explosion we saw in March, we are now looking at plans to ultimately double or triple that original volume target, which will increase go-live system capacity."

ASX has been consulting on a revised implementation schedule and is close to completing its review of feedback from CHESS users. ASX will announce the revised implementation schedule in the second half of October.

The DLT-based system is expected to bring greater benefits such as better record keeping, reduced reconciliation, more timely transactions, and better quality data.

ASX is developing a DLT-based system to replace the exchanges 25-year old Clearing House Electronic Subregister (CHESS) system. ASX had already delayed the time frame to go-live with the new DLT-based system multiple times from the initial plan to go-live in the fourth quarter of 2020.

In August 2019, ASX had expressed its intention to use blockchain in its operations in Australia and New Zealand after teaming up with New York-based blockchain developer Digital Asset and cloud computing software provider VMware.

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