AUSTRALIAN SECURITIES EXCHANGE TO TRIPLE CAPACITY OF DLT SYSTEM

The Australian Securities Exchange (ASX), the primary securities exchange in Australia, has embarked on a transformative journey to modernize its clearing and settlement system, known as CHESS (Clearing House Electronic Subregister System).This ambitious undertaking involves replacing the existing legacy infrastructure with a cutting-edge, blockchain-based platform utilizing Distributed Ledger Technology (DLT). According to the exchange, the new goal is to scale to much higher processing levels to accommodate higher trade volumes there were roughly 3.5 million more trades in March 2025 compared to the previous year. Cointelegraph reported on Oct. 1 that the ASX intended to triple the capacity of its planned DLT system.While the initial plans faced unexpected hurdles, including delays attributed to the unprecedented trading volumes triggered by the pandemic, the ASX remains committed to this pivotal upgrade.This monumental surge in activity exposed limitations in the planned DLT system's capacity, prompting a significant reassessment and subsequent decision to triple its processing capabilities.This article delves into the intricacies of this project, exploring the reasons behind the delays, the rationale for the capacity expansion, the regulatory landscape, and the potential implications for the Australian financial markets. Today, the Australian Securities Exchange s regulators outlined their expectations for the DLT-based CHESS replacement system. They emphasized the importance of replacing the system as soon as can be safely achieved .Understanding the challenges and opportunities surrounding the ASX's adoption of DLT is crucial for anyone involved in or interested in the future of securities trading and settlement in Australia.

The Genesis of the CHESS Replacement Project

The decision to overhaul the CHESS system wasn't taken lightly. Australian Securities Exchange to triple capacity of DLT system Cointelegraph Australie DLT blockchain banksFor years, the ASX has been under increasing pressure to modernize its infrastructure to align with global advancements in securities trading technology.The current CHESS system, while reliable, is based on older technology and struggles to keep pace with the demands of today’s fast-paced and high-volume trading environment. According to an Oct. 28 update from the ASX, the exchange has officially delayed the rollout of distributed ledger technology (DLT) infrastructure to replace its current system for processingIn 2025, the ASX announced its partnership with Digital Asset Holdings, a blockchain technology firm specializing in DLT solutions, to develop a DLT-based replacement for CHESS.This marked the beginning of a multi-year endeavor aimed at revolutionizing how securities are cleared and settled in Australia.

The initial vision was ambitious: to leverage the benefits of DLT, including increased transparency, efficiency, and reduced costs, to create a more robust and resilient clearing and settlement platform. The exchange has been under pressure to upgrade its system for some time now as securities trading continues to evolve globally. In 2025, it announced that it had partnered with Digital Asset Holdings, a New York-based blockchain tech firm, to upgrade CHESS to a DLT-based system.The proposed system promised to streamline processes, eliminate intermediaries, and provide real-time visibility into transaction data. The Australian Securities Exchange will postpone its blockchain-based CHESS replacement after enormous trading volumes as the contagion required a huge increase of capacity. The blockchain-based system had been planned for official trials in the month of December, with a premeditated launch window of the initial part of 2025.This, in turn, was expected to attract more participants to the Australian market and foster greater innovation in financial products and services.

Unforeseen Challenges and Project Delays

The path to DLT adoption has not been without its bumps. The Australian Securities Exchange will delay its blockchain-based CHESS replacement after huge trading volumes due to the pandemic required a massive expansion of capacity. The DLT- based system had been scheduled for official trials in December, with a planned launch window of early 2025. At its annual meeting this year, ASX chief executive Dominic StevensThe ASX has encountered several significant hurdles, leading to multiple delays in the project timeline.One of the primary factors contributing to these setbacks has been the sheer complexity of replacing such a critical piece of market infrastructure.

The initial target for the go-live of the new DLT-based CHESS system was set for early 2025, with official trials scheduled for December prior to that.However, the onset of the COVID-19 pandemic and the subsequent surge in trading volumes exposed critical capacity limitations in the planned system.The exchange witnessed an unprecedented spike in market activity, with significantly more trades executed in March 2025 compared to the previous year.This surge highlighted the need for a more scalable and robust platform capable of handling peak trading loads.

As ASX CEO Dominic Stevens stated at an annual meeting, the exchange decided to delay the rollout and significantly increase the planned capacity of the DLT system to accommodate the increased demands.This was not a simple fix but required a fundamental redesign and re-engineering of the platform's architecture.

Furthermore, securing the necessary regulatory approvals and addressing stakeholder concerns has added to the project's complexity and timeline.Regulators have emphasized the importance of a smooth and safe transition to the new system, mandating rigorous testing and validation to ensure its stability and reliability.Stakeholders, including brokers, custodians, and clearing participants, have also provided valuable feedback, leading to refinements and adjustments to the system's design and functionality.

Tripling Capacity: Adapting to Market Demands

The decision to triple the capacity of the DLT system underscores the ASX's commitment to building a future-proof platform capable of handling the evolving demands of the Australian financial markets. The Australian Securities Exchange will delay its blockchain-based CHESS replacement after huge trading volumes due to the pandemic required a massive expansion of capacity. The DLT- based system had been scheduled for official trials in December, with a planned launch window of early 2025. At its annual meeting this year, ASX chief executive Dominic Stevens told shareholdersThis expansion reflects a proactive approach to address potential bottlenecks and ensure the system can accommodate future growth in trading volumes.

Why Tripling Capacity Matters

• Enhanced Scalability: A system with triple the capacity can handle significantly larger trading volumes without experiencing performance degradation or delays.This ensures the smooth functioning of the market during peak periods and reduces the risk of system outages.
• Future-Proofing: The Australian financial markets are constantly evolving, with new products and trading strategies emerging regularly. The home of Australia's financial markets.Investing in a high-capacity DLT system ensures the platform can adapt to future growth and innovation without requiring costly and disruptive upgrades.
• Increased Resilience: A more robust system is better equipped to withstand unexpected surges in trading activity or potential disruptions.This enhanced resilience is crucial for maintaining market stability and investor confidence.

The additional capacity will allow the ASX to comfortably manage peak trading volumes, even during periods of heightened market volatility or unexpected events.This is particularly important in today's interconnected global financial markets, where events in one region can quickly impact trading activity in others.

Regulatory Expectations and Oversight

The Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) play a crucial role in overseeing the ASX and its CHESS replacement project.These regulatory bodies have outlined their expectations for the new DLT-based system, emphasizing the importance of safety, reliability, and efficiency.

Key regulatory expectations include:

• Robust Risk Management: The new system must have comprehensive risk management controls in place to mitigate potential threats to market stability and investor protection.
• Operational Resilience: The platform needs to be highly resilient to operational disruptions, with robust backup and recovery mechanisms in place.
• Compliance with Regulatory Requirements: The DLT-based system must comply with all applicable laws and regulations, including those related to data privacy, anti-money laundering, and counter-terrorism financing.
• Transparency and Auditability: The system should provide clear and transparent records of all transactions, allowing regulators to effectively monitor market activity and ensure compliance.

The regulators have stressed the need to replace the current CHESS system as soon as can be safely achieved.They recognize the potential benefits of DLT but also emphasize the importance of a carefully planned and executed transition to minimize risks. The Australian Securities Exchange s (ASX) has walked away from its planned distributed ledger technology (DLT) project to replace its legacy clearing and settlement system, ending a six-year journey filled with delays and criticism.Regular audits and assessments are part of the continuous oversight.

The Potential Benefits of a DLT-Based CHESS System

Despite the challenges and delays, the ASX remains confident that the DLT-based CHESS replacement will deliver significant benefits to the Australian financial markets. In November 2025 the Australian Securities Exchange (ASX) paused work on a DLT-based replacement of its CHESS settlement system on which it had spent more than US$169 million and wrote off the investment.The potential advantages of adopting this technology are substantial.

Key Advantages of DLT in Clearing and Settlement

1. Increased Efficiency: DLT can streamline clearing and settlement processes by automating manual tasks and reducing the need for intermediaries. The Australian Securities Exchange will delay its blockchain-based CHESS replacement after huge trading volumes due to the pandemic required a massive expansion of capacity.This can lead to faster transaction times and lower costs.
2. Enhanced Transparency: DLT provides a shared, immutable ledger of all transactions, increasing transparency and reducing the risk of fraud or errors.
3. Reduced Costs: By eliminating intermediaries and automating processes, DLT can significantly reduce the costs associated with clearing and settlement.
4. Improved Risk Management: DLT can provide real-time visibility into transaction data, allowing for better risk management and more timely detection of potential problems.
5. Greater Innovation: A DLT-based platform can foster innovation in financial products and services by providing a more flexible and efficient infrastructure for developing new offerings.

For example, the increased efficiency could significantly speed up settlement times for trades, potentially moving from the current T+2 (two business days after the trade date) to T+0 or T+1. The move of CHESS ASX s equities clearing and settlement system to a DLT platform through the help of Digital Asset has been planned since 2025 but wrought with delays. In an AGM address, its chairman confirmed the exchange is still on-track for go-live in April 2025.This would free up capital faster and reduce counterparty risk.Similarly, enhanced transparency would make it easier for regulators to monitor market activity and detect potential abuses.

The National Stock Exchange of Australia (NSX) and DLT

While the ASX's journey with DLT has been fraught with delays, it's worth noting that the National Stock Exchange of Australia (NSX) has also been exploring the potential of this technology. Skip to main content Bitcoin Insider. MenuThe NSX has completed work on its own DLT trading system and is awaiting regulatory approval to connect to the ASX. The Australian Securities Exchange (ASX) canceled its blockchain-based system upgrade and paused the project aimed at updating its 25-year-old settlement and clearing system.The success of the NSX's DLT initiatives could provide valuable insights and potentially accelerate the adoption of DLT in the broader Australian financial market.

Frequently Asked Questions (FAQs)

What is CHESS?

CHESS stands for Clearing House Electronic Subregister System.It is the system used by the Australian Securities Exchange (ASX) to clear and settle equity transactions.

Why is the ASX replacing CHESS?

The ASX is replacing CHESS because the current system is based on older technology and needs to be modernized to meet the demands of today's fast-paced and high-volume trading environment. El cambio a blockchain del Exchange de Valores de Australia se retrasa hasta 2025 En su reuni n anual de este a o, el CEO de ASX, Dominic Stevens, dijo a los accionistas que estaban buscando triplicar la capacidad de su sistema DLT planificado en funci n del aumento en los vol menes comerciales visto a principios de marzo .A DLT-based system promises greater efficiency, transparency, and reduced costs.

What is Distributed Ledger Technology (DLT)?

Distributed Ledger Technology (DLT) is a technology that allows data to be stored across multiple computers or nodes in a network.This creates a shared, immutable record of all transactions, making it more transparent and secure than traditional centralized systems. The new blockchain-based system will replace the existing CHESS system The Australian Securities Exchange will delay its blockchain-based CHESS replacement after huge trading volumes due to the pandemic required a massive expansion of capacity. The DLT- based system had been scheduled for official trials in December, with a planned launch window of early 2025.At its MoreBlockchain is a type of DLT.

Why did the ASX delay the CHESS replacement project?

The ASX delayed the project primarily because of the unprecedented trading volumes triggered by the COVID-19 pandemic.This surge in activity exposed limitations in the planned DLT system's capacity, prompting a significant reassessment and subsequent decision to triple its processing capabilities.

When is the new CHESS system expected to go live?

While an initial target was set for early 2025, the project has experienced delays. A Private Investor is a recipient of the information who meets all of the conditions set out below, the recipient:A firm go-live date has not been specified while the capacity upgrade is taking place, though the ASX continues to work towards implementation as soon as can be safely achieved.

What are the benefits of using DLT for clearing and settlement?

The benefits include increased efficiency, enhanced transparency, reduced costs, improved risk management, and greater innovation.

Navigating the Future of Australian Securities Trading

The ASX's decision to triple the capacity of its DLT system marks a significant milestone in the ongoing journey to modernize Australia's financial markets.While the project has faced its share of challenges, the commitment to building a robust and scalable platform underscores the long-term vision for the future of securities trading and settlement.The increased capacity provides resilience and addresses future growth.

As the project progresses, continued collaboration between the ASX, regulators, and stakeholders will be crucial to ensure a smooth and successful transition to the new DLT-based CHESS system.By embracing innovation and addressing the evolving needs of the market, the ASX can solidify its position as a leading global exchange and foster a more vibrant and competitive financial ecosystem.

The transition to DLT for critical financial infrastructure is a complex undertaking, demanding rigorous testing, robust risk management, and close coordination with all market participants.But the potential rewards—increased efficiency, enhanced transparency, and greater resilience—make it a worthwhile endeavor.Keep an eye on announcements from the ASX and industry publications for updates on the project's progress.