ASX states its blockchain will help issuers manage shareholders
ASX has said companies listed on its exchange that its delayed blockchain project will include new features involving “improved processing for corporate actions” that promise to decrease costs for equity issuers. In an update on its new equities clearing and settlement system, ASX said it anticipated the distributed ledger technology (DLT) to promote software developers to create “microservices” for listed companies.
Therefore, the replacement to the CHESS system would enable issuers to produce better voting applications for shareholders or analytics engines for management. “We believe that many of the most exciting changes will come from service providers competing for your business by offering more cost-effective and innovative products,” ASX said in a statement. This will involve “delivering improvements to corporate action elections, particularly for participants who have asked for more efficient and risk-averse processes”.
ASX stated on March 25 it had delayed the previous April 2021 start date for the new system to enable market participants to react to COVID-19. ASX has not stated how long the consultation will operate for or when a new start date will be declared. However, the crisis has strengthened within ASX the requirement to move away from paper-based post-trade processes, which have been difficult to manage during the pandemic with remote workforces. “We remain committed to the project and will continue to act in the best interests of the whole market,” ASX said on Tuesday.
It also encouraged issuers to not increase fees “on like-for-like services,” because the CHESS replacement project is being financed by its capital expenditure program, not by raising fees. It proceeds to consider a single “cutover” weekend “is the option with least risk and complexity”. Computershare and other market intermediaries have asked questions about the costs and uncertainties of the CHESS replacement project. There are concerns ASX will utilize the infrastructure to enter the registry space.
But CHESS replacement “will not remove the need for share registry services”, ASX said. “Several share registries are already working with us to enhance their offering to issuers using distributed ledger technology.” ASX approved the project “will not change the framework for the use of data”, which will continue to be provided by the working rules for clearing and settlement services. Existing “proper use” and privacy protections will proceed to apply.
Ann Bowering, Computershare CEO of issuer services in Australia, stated there was “a lack of clarity and certainty over critical technical and procedural aspects of the project which point to overreach in scope by the ASX.” The company looked forward to “an open, informed, and robust discussion” on the project during the consultation. ASX stated it had obtained “valuable feedback” on changes to its ASX rules to accommodate the new system. Seven of 10 software drops are accessible for service providers who combine to CHESS to test in consumer development environments.