Adrian Lee is a senior lecturer in finance at the University of Technology Sydney , where his research interests include asset markets and derivatives. KiHoon Hong is an assistant professor at the university, and was formerly a research fellow for Korea Capital Market Institute’s Capital Markets Department.
Here, Lee and Hong discuss the Australian Securities Exchange’s (ASX) investment in blockchain startup Digital Asset Holdings, and how it could influence the company’s offerings. trade, market Recently the Australian Securities Exchange (ASX) bought a $15m stake in Digital Asset Holdings, a developer of blockchain technology. One of the main reasons is to upgrade its share registry system by using blockchain or distributed ledger technology.
And it’s been reported that JP Morgan Chase is also partnering with Digital Asset Holdings to trial the technology. What is blockchain/distributed ledger technology?
Put simply, blockchain technology is a method of recording and confirming transactions where instead of a centralised platform, participants each hold a complete record of transactions through peer to peer verification of transactions.
This means there is no central recording system, rather each participant keeps a record of all transactions ever made.
This is the same system which allows bitcoin to operate with no central body. How would blockchain technology be adopted at the ASX?
Instead of the ASX clearing house settling trades, trades will be settled by participants confirming transactions through the peer to peer network.
The network (likely made up of brokers) will record the buyer and selling participants, the number of shares traded, price of shares, time of exchange and the exchange of funds.The ASX will still provide a centralised electronic exchange for participants to place orders, only the settlement or back office function will be sourced to the network. The benefits? Blockchain has great potential to cut inefficiencies in the share settlement […]
