Investing in its digital footprint across areas such as distributed ledger technology (DLT), exploring potential use cases for artificial intelligence and expanding its data centre has turned technology services into a meaningful business for the ASX.
During the VMworld conference this year in San Francisco, the CIO for the ASX Dan Chesterman explained how its investment in these technology areas were playing a part in the digital transformation for the financial industry, as technology services turn into an important business for the company that runs the Australian Securities Exchange.
“Financial market infrastructures, and the ASX in particular, have got a good track record of using technology to help innovate the market, and ideally, drive the industry forward. That's what we try to do,” he said.
During a presentation, Chesterman said it made more money from technology services than what it made from trading, and went on to further explain that its trading technical services business had grown at a rate of 10 per cent per year, for the past eight years.
“The reality is we don’t have a technology services business, if we don’t have trading,” he said.
Within its Australian Liquidity Centre (ALC), Chesterman said it had more than 100 customers who retain their infrastructure there and has moved into a new data centre facility, launching a backup data centre.
"We moved into a new facility because the current one we were in couldn't meet the sort of scale and growth requirements that we have,” Chesterman said.
“When we opened the ALC, we had a choice: we could have built our own data centre, we could have made it just for co-lo customers, brokers, or participants, or even make it open, and we made it completely open, so anyone could come up with their infrastructure in our data centre.
“It is a story of open infrastructure and what we're doing with DLT is a very similar situation. I think it's worth emphasising, what we're trying to do with this is create infrastructure, which is open so the participants and our customers can support their businesses with less risk, less friction and less cost.
“That's our purpose.”
The ASX recently signed a memorandum of understanding (MOU) with Digital Asset (DA, which it partially owns) and VMware to back its work on distributed ledger technology (DLT) initiatives spanning Australia and New Zealand.
This includes the development of the application to replace CHESS; and the support of DAML -- the open source smart contract programming language used to build distributed applications.
In its eagerness to adopt DLT, the exchange is being placed in a ‘bellwether’ situation among other global exchanges, pending the success of the adoption and then consider their commitment to DLT, Chesterman said.
“I give the ASX board a lot of credit for actually taking time to explore this technology and really understand it,” he said. “Obviously our security, scalability, privacy and cyber requirements are very, very high. We wouldn't do something that's putting any of that reputation at risk.”
Chesterman said prior to pushing the new DLT system live in 2021, it will continuously endure rounds of security, validation and non-functional testing both by the ASX and third parties.
“We will be doing accreditation for those customers that do connect to the system. Security, privacy and confidentiality, drive us all the time,” he said.
As well as investing in DLT, the exchange was also dabbling within other technology areas, recently revealing its new data analytics platform called ASX DataSphere, which combines ASX and third party data to drive a range of products that can be purchased online.
The open platform will feature a range of analytic solutions to regulatory, risk, valuation and compliance problems to support the industry’s digital transformation, ASX CEO and managing director Dominic Stevens recently said.
On top of this, the ASX was also in the process of revamping its website, and experimenting with the potential use of artificial intelligence and machine learning, in particular with market announcements. Chesterman said it was a proof of concept at this stage and it was working through the potential legal consequences of using AI.
“We've been working with it and we certainly see in that sort of context, where there is actually a serious consequence for any error with a market announcement -- where if we put something as sensitive, and it wasn't, or it's marked as something not sensitive, and it was -- that's going to be an issue," he said.
“What we would like to do is give individuals better insights into what could be in the document."
Julia Talevski attended VMworld 2019 in San Francisco as a guest of VMware.