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Why ASX Got on Board with Blockchain

Posted on March 30th, 2016 by Sophie Gerber in AFSL Compliance

background-20126_1280ASX’s executive chairman Rick Holliday-Smith has reconfirmed ASX’s commitment to developing the blockchain, the distributed ledger technology, and commented that this technology “offers a unique opportunity for Australia to be a leader in the assessment of innovative market solutions.”

Blockchain technology is developing and expanding rapidly. With quite a few new entrants to the market for blockchain and vast amounts of recent investment, the early results have been seen as ‘very promising’ by the current ASX executive chairman.

What is a blockchain?

The new technology is essentially a new tool for the management of information. A blockchain is an electronic ledger of digital records or transactions that are authenticated and maintained through a distributed, shared network of participants using a group consensus protocol. A well-known example of this is Bitcoin.

Different sets of transactions are considered to be different blocks in the chain, and the register itself acts as a whole blockchain.

The most ‘disruptive’ aspect of the new technology is its potential to eliminate the need for third party intermediaries in transactions, or the ability to create trust between two parties that are willing to transact. The new technology is expected to cause significant changes to industries relying upon guarantors, authentications and ‘trusted third parties’.

The excitement in the capital markets

There are many potential applications for blockchain, in both private and public sectors. In the financial markets, blockchain technology will alter the ways in which financial assets are transacted, causing huge impacts on capital markets, clearing houses, broker-dealers and banks.

The financial industry has demonstrated huge interest in this new technology and committed itself by investing large amounts of money in it. Certain functions within the financial sector have begun utilising this technology in transferring ownership or custody of financial assets.

Read the rest of this article on Finance Magnates or in PDF on our Media Page.

Sophie Gerber

Sophie is the director of both Sophie Grace Legal Pty Ltd and Sophie Grace Pty Ltd. Sophie has worked with some of Australia’s largest financial services organisations in compliance, legal and operational roles. She has also worked with small businesses to provide tailored solutions with a strong understanding of business practicalities as well as obligations to regulators.