ASX’s new CHESS oversight group put on notice by Greg Medcraft
Former ASIC chairman Greg Medcraft has urged the leader of the ASX’s new clearing and settlement advisory group, Alan Cameron, to make sure the exchange does not abandon blockchain technology and be left behind in the global capital markets technology arms race.
Even though ASX botched its initial attempt to upgrade the equity market’s clearing and settlement systems with a private version of blockchain, Mr Medcraft said the failures were due to ASX’s project mismanagement – not the underlying technology itself.
Indeed, he pointed to several markets, including in the United States, continuing to develop new settlement systems with distributed ledger technology, which can create efficiencies for investors by reducing the time and costs of finalising trades.
Australia should be encouraging ASX competitors to create similar alternative systems, and the entire sharemarket does not need to be overhauled at once – as ASX initially planned – he added.
Former ASIC chairman Greg Medcraft says ASX should continue to consider blockchain to reduce settlement risks. Dominic Lorrimer
“Blockchain is still happening. Successful blockchain deployment has not been about a big bang: internationally, exchanges are taking a modular approach, and this is where ASX should go,” Mr Medcraft told The Australian Financial Review. “That is the logical approach. You have to learn to crawl before you can walk.”
Mr Medcraft said it would be sensible for the new committee being led by Mr Cameron – also a former ASIC chairman – to review ASX’s plans, and ensure it is building future infrastructure that allows for “atomic settlement”. This refers to the instant transfer of security title and payment at the same time as a trade; it promises substantial
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