The Australian Securities Exchange (ASX) for the last few years has been working on a project to replace its existing Clearing House Electronic Subregister System (CHESS) platform with another platform based on distributed ledger technology (DLT).
The ASX has grand plans for when the new CHESS system is live and has been touting the platform as one that will allow for a thriving innovation ecosystem.
In its submission [PDF] to the Select Committee on Financial Technology and Regulatory Technology and its probe into the opportunities the two vectors present to Australia, the ASX touched on the opportunities blockchain, and specifically its CHESS system, will offer fintechs.
"The ASX is building a world-leading distributed ledger infrastructure which will be open for fintechs to build applications on," the ASX wrote. "To do this, fintechs in Australia will need to develop expertise in blockchain and DLT."
According to the exchange, one of the ways the government could help reduce the barriers to entry for fintechs is by encouraging learning and development in this space.
"The government can encourage universities, schools, and other training institutions to provide the necessary training for young developers and technologists," the ASX continued.
"Also, the government could consider helping fintechs fund the substantial investment in training and education required to leverage new technologies by sponsoring courses and educational institutions."
The exchange also told the committee that another way the government could help fintechs is by "opening the doors" to business opportunities, pointing to an initiative underway in Dubai, the Dubai Blockchain Strategy, which aims to bring together government departments, private companies, and also fintechs.
"Although fintechs are extremely creative and agile, the barriers to entering new markets can be high," the submission continued. "These barriers range from high fixed costs of entry to challenges building market trust, and brands complying with regulatory red tape."
In addition to investing in blockchain, the ASX said the government could also do more in encouraging fintechs to continue to invest in research and development. While it said existing incentives do assist, the ASX believes the current process can be cost and time consuming to apply for, and too narrow in scope for fintech businesses combining existing technology with their own.
Elsewhere, the ASX has suggested the committee give thought to the development of common rules, data standards, systems, and platforms that allow fintechs to access government data and payment rails.
"Standardisation can facilitate innovation by removing frictions and allowing fintechs to develop applications that can service a range of customers," it wrote.
According to the ASX, there is also a need for the government to take the lead in encouraging competition, saying agencies should be encouraged to look beyond traditional providers when considering new projects.
"Awarding government contracts to fintechs can be extremely beneficial, allowing the fintech to immediately build expertise and credibility through working with government," the ASX continued.
The ASX also recommended for the government to work with equity financiers, such as the superannuation industry, to encourage funding of fintechs.
MORE FROM THE INQUIRY
- Senate committee to probe Australia's fintech and regtech opportunity
- ANZ asks for third party Consumer Data Right access
- Aussie finance regulators work alongside startup scene in the name of innovation
- RBA not convinced Facebook's Libra will succeed in Australia
- Stone and Chalk demands for new strategy to support Australia's startup fintech sector
- Energy sector asks not to be forgotten in changes to Aussie data-sharing rules