Australia's primary stock exchange could soon have a new blockchain-based rival.
National Stock Exchange of Australia owner NSX Ltd. and financial institution iSignthis (ISX), both publicly listed companies, announced Thursday they are forming a joint venture to offer a digital securities trading platform.
Called ClearPay, the new entity will offer a platform based on distributed ledger technology (DLT) and provide same-day delivery versus payment (DVP) settlement. iSignthis will integrate its "know your customer’s customer" security and other solutions with the platform.
The firms said they intend for ClearPay to compete with the Australian Securities Exchange (ASX) – which is also building a DLT replacement for its outdated CHESS clearing system in partnership with blockchain firm Digital Asset – by providing same-day settlement solutions in an industry that traditionally takes up to three days to fully clear trades. The ASX is eyeing July for the start of industry tests of its new platform, which has been in the works for some years.
Thomas Price, acting CEO of NSX, said in a press release the market is in “broad agreement” that cash equity exchanges were facing a "global technology revolution" that is beginning to challenge legacy methods of clearing and settlement.
“Having patiently monitored the development of the appropriate technology ... we consider that this is the right time for the NSX to act,” Price said.
As part of the shareholders' agreement, ISX has invested A$4.2 million in NSX via a private placement. That brings the investor a 12.96 percent stake in NSX at $0.145 per share.
ClearPay is expected to go live "by early 2021." After that, the firms expect the domestic and international broker network to connect via the electronic data interchange standard ISO20022, and participate using an industry-standard blockchain.
The DLT platform will be accessible to participants and share registry operators, with the National Stock Exchange of Australia as the central authority.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.