Blockchain’s Role in Australian Stock Trading: A Call for Regulation

Understanding Chi-X Australia’s Concerns

The launch of a blockchain system by the Australian Securities Exchange (ASX) has prompted a pivotal move from market operator Chi-X Australia. On October 30, reports surfaced detailing Chi-X’s call for an investigation by the Australian Competition and Consumer Commission (ACCC) into how this emerging technology could reshape trading dynamics.

The Blockchain Advantage: What’s the Fuss?

The incoming blockchain platform is set to replace ASX’s outdated Clearing House Electronic Subregister System (CHESS), touted as a technological marvel that could potentially grant ASX an unfair competitive edge. Michael Somes, Chi-X’s general counsel, openly expressed concern about how this development might exacerbate existing issues in market competition.

The Moat Dilemma: What’s the Big Deal?

In a market that already sees the ASX as holding a significant advantage, Somes likened ASX’s position to being surrounded by a “substantial moat.” He elaborated that while competition is theoretically viable, bridging this moat with a new blockchain infrastructure presents a monumental challenge. Noting that legislative measures should be put in place, Somes believes that a regulatory approach is essential for fair play.

Implications for Regulation: The ACCC’s Role

Somes recommends the creation of a framework that would empower the ACCC to step in more decisively. Without regulatory oversight, Chi-X fears that the competitive landscape will skew heavily in favor of ASX—a risk that could undermine market integrity.

A Global Shift: Blockchain in Stock Exchanges

While Australia grapples with these challenges, other stock exchanges worldwide have quickly adopted blockchain tech. For instance, the Shanghai Stock Exchange announced its plans to incorporate distributed ledger technology in securities transactions, while the London Stock Exchange has also recognized blockchain’s potential in streamlining the issuance of securities.

The Future: A Battle of Traditional vs. Digital Exchanges

As more exchanges explore blockchain, industry experts like Thomas Zeeb from Swiss SIX predict that digital platforms may eventually displace traditional ones. This vision could reshape trading infrastructures globally, not just in Australia.