Blythe Masters, CEO of Digital Asset Holdings, operates the blockchain startup in which the ASX has a share, said “distributed ledger technology is probably one of the biggest ideas I have come across in 30 years working in financial services”.
In January, ASX paid $14.9 million for a 5 % equity stake in Digital Asset Holdings, which is based in New York. Digital Asset is also working with ANZ Banking Group and other global banks and market operators. At JP Morgan, Masters played a key role creating the modern credit default swap before rising to become CFO of JP Morgan’s investment bank and global head of commodities, before she pivoted into Digital Asset last year. This is mainly due to clunky reconciliation processes, because each market participants has to keep their own record of their transactions and reconcile these with each other.
Distributed ledgers offer market players a single source of information, which is securely stored on a network of computers that keeps a full replica of each ledger which are synchronized with each other. Masters said this could eliminate reconciliation activity which adds up to tens of billion of dollars and waste in banks and brokers around the world. Former ASX chief executive Elmer Funke Fupper, who was forced to resign from the exchange, was a vocal proponent of the benefits of benefits of distributed ledgers, saying the new technology could cut some of the $4 billion to $5 billion it costs to run the equity market each year.
Deputy ASX CEO Peter Hiom said ASX is “the first exchange to say we are going to do something of this magnitude and this centrality to how the market operates today but the exchange didn’t want to put our neck out or to be different from other exchanges and was keen to work towards common standards.