Australian Stock Exchange Wants Oversight of Blockchain Trading System

Published at: Oct. 30, 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 tech on trading activities.

Reuters reported on Oct. 30 that stock exchange Chi-X Australia is concerned that a new blockchain system implemented by the Australian Securities Exchange (ASX) — Chi-X Australia’s sole competitor — could present an unfair advantage. 

ASX will replace its Clearing House Electronic Subregister System (CHESS) with a new blockchain platform for its registry, clearing and settlement activities. 

Michael Somes, the general counsel of Chi-X, said that the blockchain system will render already present problems worse:

“There’s a substantial moat around the ASX clearing and settlement business… And the CHESS replacement project is perhaps making it bigger. [...] It would be very difficult for the competition to bridge that moat - I’m not saying it won’t happen... but it needs to be regulated as if it won’t.”

Somes further suggested that there should be a legislative framework allowing the ACCC to intervene. 

In addition to being ASX’s sole competitor, Chi-X Australia is also its only client, relying entirely on ASX for clearing services, according to Reuters. 

Blockchain tech gains traction for stock trading infrastructure

Stock exchanges globally have been applying blockchain technology to various parts of their business activities for the past few years. ASX, for its part, first announced plans to replace CHESS with a blockchain-based platform in 2017.

In July of last year, the Shanghai Stock Exchange — the world’s fourth-largest stock exchange — released plans to use distributed ledger technology in securities transactions.

In May 2019, CEO of the London Stock Exchange Nikhil Rathi said that blockchain technology could have widespread application in issuing securities and settlement. 

In a maximalist take on blockchain’s application in securities trading, Thomas Zeeb of Swiss leading stock exchange SIX said last year that digital exchanges based on blockchain tech will eventually replace traditional ones.

Additional reporting by Adrian Zmudzinski

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