The Australian Securities Exchange (ASX) has signed a three-party memorandum of understanding (MOU) with Digital Asset (DA) and VMware to work together on distributed ledger technology (DLT) initiatives in Australia and New Zealand.

The ASX has been an early pioneer in blockchain technology, deciding in 2015 to replace its 25-year-old CHESS stock-clearing system with a system based on the distributed ledger technology.

Under the principles in the MOU, the ASX plans to provide its DLT offering with the support of DA and VMware. This includes the development of the application to replace CHESS and the support of DAML (the open source smart contract programming language used to build distributed applications). It also covers the provision and support of the distributed ledger and associated infrastructure which delivers the ASX’s data privacy, confidentiality and security requirements at greater scale.

While the ASX is primarily focusing on the replacement of CHESS, the organisation said the partnership will strengthen its ability to support the financial services industry using the infrastructure to create new services and innovations beyond clearing and settlement.

Peter Hiom, ASX Deputy CEO, said: “This new partnership is a very positive development that will help us support a wider range of DLT solutions developed by the industry. It confirms our belief in the potential of DLT as we remain on track to deliver the CHESS replacement system in March-April 2021.”

The MOU extends of the ASX’s existing relationship with VMware, which supplies virtualisation and infrastructure solutions to ASX and DA the creator of DAML and ASX’s CHESS replacement technology partner.

All three parties will work together to provide and support DLT solutions to other customers in Australia and New Zealand. Having signed the MOU, ASX, DA and VMware are now working on full legal documentation.

Yuval Rooz, co-founder and CEO of Digital Asset, said: “We continue to achieve our milestones to deliver a production-grade, scalable distributed ledger solution for CHESS. VMware is now part of the mission we share with ASX to deliver a DAML-based distributed infrastructure to realise the full potential of this technology.”

Currently, software for the new system to replace CHESS is being progressively deployed within ASX’s customer development environment, where customers and their service providers have begun exploring the clearing and settlement functionality of the new system.

“Providing a state-of-the-art DLT-based system will create new business opportunities for the industry,” said David Tennenhouse, senior vice president and chief research officer at VMware.

“We’re working closely with DA and ASX on a combined offering to provide the enterprise-grade foundation for ASX, and we look forward to expanding our relationship.”

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