SYDNEY Australian markets operator ASX Ltd on Friday said it has bought a minority stake in a U.S. blockchain developer, positioning itself to become the first stock exchange in the world to use distributed ledger technology for public companies.
The A$14.9 million ($10.43 million) investment in Digital Asset Holdings would help to cut costs, speed up transactions and make them more secure, ASX said in a statement, as it joined a slew of other financial firms that are buying into the technology originally developed for cryptocurrency bitcoin.
"Distributed Ledger Technology could provide a once in a generation opportunity to reduce cost, time and complexity in the post-trade environment of Australia’s equity market," ASX Managing Director and CEO Elmer Funke Kupper said in the statement.
"Moreover, it could stimulate greater innovation by ASX and other providers of services to issuers, investors and intermediaries."
Distributed ledger or blockchain technology maintains a continuously growing list of transaction data which cannot be tampered with or revised. Proponents say its use could make it easier to keep track of information and reduce settlement times.
ASX bought a 5 percent equity interest in New York-based Digital Asset. It will also fund an initial phase of development and acquire a warrant that will give it the right to purchase further equity and appoint a director to the board.
Nasdaq Inc, the exchange and clearing house operator where many global tech giants are listed, is testing the ground with blockchain technology on its market for private companies, Nasdaq Private Market. It completed its first transaction using the technology in December. Other exchange operators, including Deutsche Boerse and London Stock Exchange have joined hands with financial services and tech heavyweights to build platforms and applications using the blockchain technology.
ASX will work with Digital Asset to design a new post-trade solution for the Australian equity market.
Digital Asset's post-trade solutions will meet the regulatory, operational and security standards that apply to Australia’s financial markets, ASX added.
ASX shares rose in line with the broader market on Friday, closing up 1.3 percent.
(Additional reporting by Elzio Barreto in Hong Kong; Editing by Stephen Coates)