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The Australian arm of equity exchange Chi-X has called for more oversight of rival Australian Securities Exchange’s (ASX) planned blockchain system, Reuters reported.
In early 2016, the ASX officially announced its plans to launch a blockchain system, which will replace its Clearing House Electronic Subregister System (CHESS). It selected blockchain startup Digital Asset Holdings as its partner for this initiative.
Initially slated to launch somewhere between Q4 2020 and Q1 2021, the roll-out of the blockchain system was later postponed to March-April 2021. More recently, the ASX opened a new Customer Development Environment (CDE) as part of its efforts to transition to the blockchain-based system.
Chi-X Australia, which enjoys over 20 percent market share, has now raised concerns over the ASX’s blockchain plans. In a media briefing, company executives reportedly said that the new system would give an unfair advantage to the ASX.
“There’s a substantial moat around the ASX clearing and settlement business...and the CHESS replacement project is perhaps making it bigger,” said Michael Somes, Chi-X General Counsel. “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.”
It is worth mentioning here that Chi-X Australia is not only ASX’s competitor but also its largest client. In fact, Chi-X Australia is completely dependent on the ASX for clearing services. It fears that ASX’s transition to the blockchain system could put it at a disadvantage, particularly in areas where the two compete.
“There should be a legislative framework whereby the Australian Competition and Consumer Commission can act as an arbitrator on disputes,” Somes said. “That should happen as soon as possible.”
When reached for comment, an ASX spokesperson said that the issue was a “matter for government,” adding that they are “continuing to engage closely with government and regulators, including the ACCC, throughout our CHESS replacement programme.”
