December 5, 2021

Volume XI, Number 339

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December 03, 2021

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Australian Securities Exchange Announces Decision to Implement Blockchain-Based Clearing and Settlement System

Blockchain advocates have been awaiting the final decision by ASX Ltd, the Australian Securities Exchange, as to whether ASX will replace its existing and aged CHESS registry, settlement and clearing system with a blockchain-based system that ASX has been developing and testing for the last two years.  Today, ASX announced that it will go ahead with its plan to move to the new blockchain system, as it believes that adopting it will result in significant savings of back-office costs for all involved parties.  At the end of March 2018, ASX reportedly plans to release for market feedback details regarding the launch functionality of the system and the timetable for its implementation, with the final launch date to be determined.

This decision is huge. It is a milestone in the adoption of blockchain generally, and it positions ASX at the forefront of blockchain deployment in the financial services industry.

ASX’s announcement focuses the spotlight on the underlying securities laws, policies and regulations that underpin Australian securities registration, settlement and clearing.  Law is always a lagging indicator of technological development, especially in the case of blockchain, which is so dramatically different than its predecessor technologies.  Thus, the question that Australian lawyers and regulators must be considering right now is:  Will Australia’s existing legal framework support and be compatible with this new technical infrastructure, or are new laws and regulations, as well as revisions and reinterpretations of existing principles, needed?

In the US, similar blockchain infrastructure is being developed for the securities industry, and lawyers in the financial services sector also need to be focused on what changes in regulation are necessary to smooth the transition.

© 2021 Proskauer Rose LLP. National Law Review, Volume VII, Number 346
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About this Author

Jeffrey D Neuburger, Proskauer Rose Law Firm, Technology Attorney
Partner

Jeffrey Neuburger is co-head of Proskauer’s Technology, Media & Telecommunications Group, head of the Firm’s Blockchain Group and a member of the Firm’s Privacy & Cybersecurity Group.

Jeff’s practice focuses on technology, media and intellectual property-related transactions, counseling and dispute resolution. That expertise, combined with his professional experience at General Electric and academic experience in computer science, makes him a leader in the field.

As one of the architects of the technology law...

212-969-3075
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