A rival fears Australian Securities Exchange’s upcoming blockchain settlement system and wants more oversight

Chi-X Australia, the only competitor of the Australian Securities Exchange (ASX), wants more oversight of ASX’s upcoming blockchain settlement system that will replace its decades-old CHESS clearing and settlement system.

Chi-X, which handles one-fifth of all share trading volume in Australia, fears that the ASX’s blockchain settlement system would disadvantage it, Reuters reported Wednesday. Michael Somes, general counsel for Chi-X, said at a media briefing:


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“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 added that the Australian Competition and Consumer Commission, the country’s competition regulator, should look into the matter and act as an arbitrator on disputes. “That should happen as soon as possible.”

The ASX has been working on to replace its CHESS system since as early as 2017, in an association with its blockchain partner Digital Asset. The system was initially expected to go live by the end of 2020 but got postponed until the second quarter of 2021. The ASX recently also signed a deal with cloud computing giant VMware to ramp up the development of its blockchain-based equities clearing and settlement system.