Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
I discuss all things Crypto with the co-founder of one of Australia’s Crypto Exchanges and discuss the results from their recent survey.
https://www.independentreserve.com/
Independent Reserve is a registered Australian company (ABN 46 164 257 069)
Note: DFA has no commercial relationship with the exchange and we were NOT paid to make this show.
On 10 August, the International Bank for Reconstruction and Development said it has mandated the Commonwealth Bank of Australia (CBA) as the exclusive arranger of the world’s first bond issuance solely using blockchain technology, via Moody’s.
This is credit positive for CBA because it shows the bank is making headway with significant fintech initiatives, which can help improve its operating efficiency and fend off new competition.
CBA will use the private Ethereum blockchain platform to create, allocate, transfer and manage a new debt instrument debt, dubbed “bond-i.” The transaction will provide a platform for future debt-security issuance using blockchain technology. The use of blockchain for bond issuance can offer efficiency benefits for both issuers and arrangers by simplifying the settlement processes. The technology can be used for both registry and payment systems, consolidating payments by investors and title transfers by issuers into single, instant transactions.
Prior to this transaction, CBA experimented blockchain-based bond issuance with government entity Queensland Treasury Corporation (State of Queensland, Aa1 stable). In January 2017, the bank arranged the issuance of a so-called cryptobond for Queensland, by utilizing blockchain technology. It was a trial transaction carrying no debt obligation, with Queensland acting as both the issuer and investor to test the process.
As discussed in our Bank of the Future report, fintech innovations such as these will help traditional banks reduce operating costs and also mitigate the risk of disruption by new fintech firms
Crypto-currencies do not stand up as a new form of money says Mark Carney, Governor of the Bank of England, speaking on “The Future of Money“. That said, the underlying technologies and capabilities, have potential.
The long, charitable answer is that crypto-currencies act as money, at best, only for some people and to a limited extent, and even then only in parallel with the traditional currencies of the users. The short answer is they are failing.
They are poor stores of value, an inefficient media of exchange and are virtually non-existent units of account.
Authorities need to decide whether to isolate, regulate or integrate crypto-assets and their associated activities.
This is probably the strongest statement on the subject so far from a Central Banker.
But, whatever the merits of crypto-currencies as money, authorities should be careful not to stifle innovations which could in the future improve financial stability; support more innovative, efficient and reliable payment services as well as have wider applications.
The underlying technologies and capabilities, have potential, given the right regulatory frameworks.
Their core technology is already having an impact. Bringing crypto-assets into the regulatory tent could potentially catalyse innovations to serve the public better. Indeed, crypto-assets help point the way to the future of money in three respects:
Decentralised peer-to-peer interactions
Crypto-assets are part of a broader reorganisation of the economy and society into a series of distributed peer-to-peer connections across powerful networks.28 People are increasingly forming connections directly, instantaneously and openly, and this is revolutionising how they consume, work, and communicate.
Yet the financial system continues to be arranged around a series of hubs and spokes like banks and payments, clearing and settlement systems. Crypto-assets are an attempt to create the financial architecture for peer-to-peer transactions. Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems. These must now evolve to meet the demands of fully reliable, real-time, distributed transactions.
Underlying technologies offer to transform the efficiency, reliability and flexibility of payments.
The technologies underlying crypto-assets, particularly distributed ledger, can:
- Increase the efficiency of managing data;
- Improve resilience by eliminating central points of failure, as multiple parties will share replicated data and functionality;
- Enhance transparency (and auditability) through the creation of instant, permanent and immutable records of transactions; and
- Expand the use of straight-through processes, including with “smart contracts” that on receipt of new information, automatically update and if appropriate, pay.
These properties mean distributed ledger technology could transform everything from how people manage of their interactions with public agencies, including their tax and medical records, through to how businesses manage their supply chains.
A Central bank digital currency (CBDC) accessible to all.
Crypto-assets raise the obvious question about whether their infrastructure could be combined with the trust inherent in existing fiat currencies to create a central bank digital currency (CBDC).
Currently only banks can hold central bank money electronically in the form of a settlement account at the Bank of England. To be truly transformative a general purpose CBDC would open access to individuals and firms.
The Bank has an open mind about the eventual development of a CBDC and an active research programme dedicated to it. That said, given current technological shortcomings in distributed ledger technologies and the risks with offering central bank accounts for all, a true, widely available reliable CBDC does not appear to be a near-term prospect.
Moreover whether it is desirable depends on the answers to a series of big policy questions. While these are largely for another speech, I will note that a general purpose CBDC could mean a much greater role for central banks in the financial system. Central banks may find themselves disintermediating commercial banks in normal times and running the risk of destabilising flights to quality in times of stress.
There are also broader societal questions (that others would need to answer) such as how society balances privacy rights with the extent to which the information in a CBDC could be used to fight terrorism and economic crime.
Yesterday morning, several banks in Australia started rolling out a new payment system they’re calling NPP, or “New Payments Platform.”
Until now, sending a domestic funds transfer in Australia from one bank to another could take several days. It was slow and cumbersome.
With NPP, payments are nearly instantaneous.
And rather than funds transfers being restricted to the banks’ normal business hours, payments via NPP can be scheduled and sent 24/7.
You can also send money via NPP to mobile phones and email addresses. So it’s a pretty robust system.
Across the world in the United States, the domestic banking system has been working on something similar.
Domestic bank transfers in the Land of the Free typically transact through an electronic network known as ACH… another slow and cumbersome platform that often takes 2-5 days to transfer funds.
It’s pretty ridiculous that it takes more than a few minutes to transfer money. It’s 2018! It’s not like these guys have to load satchels full of cash onto horse-drawn wagons and cart them across the country.
(And even if they did, I suspect the money would reach its destination faster than with ACH…)
Starting late last year, though, US banks very slowly began to roll out something called the Real-time Payment system (RTP), which is similar to what Australian banks launched yesterday.
[That said, the banks themselves acknowledge that it could take several years to fully adopt RTP and integrate the new service with their existing online banking platforms.]
And beyond the US and Australia, there are other examples of banking systems around the world joining the 21st century and making major leaps forward in their payment system technologies.
It seems pretty clear they’re all playing catch-up with cryptocurrency.
The rapid rise of Bitcoin and other cryptocurrencies proved to the banking system that it’s possible to conduct real-time [or near-real-time] transactions, and not have to wait 2-5 days for a payment to clear.
Combined with other new technologies like Peer-to-Peer lending platforms, fundraising websites, etc., consumers are now able to perform nearly every financial transaction imaginable– deposits, loans, transfers, etc.– WITHOUT using a bank.
And it’s only getting better for consumers… which means it’s only getting worse for banks.
All of these threats from competing technologies have finally compelled the banks to innovate– literally for the FIRST TIME IN DECADES.
I’m serious.
When the CEO of the company launching RTP in the US announced the platform, he admitted that the “RTP system will be the first new payments system in the U.S. in more than 40 years.”
That’s utterly pathetic. The Internet has been around for 25 years. Even PayPal is nearly 20 years old.
Yet despite the enormous advances in technology over the past several decades, the last major innovation in bank payments was back when Saturday Night Fever was the #1 movie in America.
Banks have been sitting on their laurels for decades, enjoying their monopoly over our savings without the slightest incentive to improve.
Cryptocurrency has proven to be a major punch in the gut. The entire banking system keeled over in astonishment over Bitcoin’s rise, and they’ve been forced to come up with an answer.
And to be fair, the banks have reclaimed the advantage for now.
NPP, RTP, and all the other new protocols are faster and more efficient than most cryptocurrencies.
Bitcoin, for example, can only handle around 3-7 transactions per second. Ethereum Classic maxes at around 15 transactions per second. Litecoin isn’t much better.
By comparison, there were 25 BILLION funds transfers in 2016 using the ACH network in the US.
Based on the typical holiday schedule and the banks’ 8-hour working days, that’s an average “throughput” of roughly 3500 transactions per second.
So, now that banks have finally figured out how to conduct thousands of transactions per second in real-time, they clearly have superiority.
But that superiority is unlikely to last.
It takes banks decades to innovate. They have enormous bureaucratic hurdles to overcome. They have endless committees to appease, including the Federal Reserve’s “Faster Payments Task Force.”
And most importantly, given that most banks are still using absurdly antiquated software, any new systems they develop have to be carefully designed for backwards compatibility.
Cryptofinance and other financial technology companies have no such limitations.
As my colleague Tama mentioned in the podcast we released yesterday, the cryptocurrency space sort of exists in ‘dog years’.
Things move so quickly that one year in crypto is like 7 years for any other industry.
Right now there is almost a unified push across the crypto sector to solve the ‘scalability’ problem, i.e. to securely transact a near limitless number of transactions in real time.
Those solutions will almost undoubtedly come from technologies that you haven’t heard very much about yet.
Hashgraph and Radix, for example, are two such ventures working on extremely elegant payment solutions that break the mold of previous cryptos.
Rather than build upon standard cryptocurrency concepts like blockchain, Proof of Work, and Proof of Stake, both Hashgraph and Radix have created their own algorithms from scratch.
This is the bleeding edge of the bleeding edge of a massively disruptive sector that has existed for less than a decade.
And there are literally dozens of other companies and technologies aiming for similar heights.
Some of them will undoubtedly succeed. And still other ventures that won’t even be conceived for years will have yet more disruptive power in the future.
The banks don’t stand a chance. The future of finance absolutely belongs to crypto.
As Bitcoin loses value, it may seem like it’s just as useful as the cryptocurrency invented for a joke – Dogecoin.
But there are genuine differences between these cryptocurrencies, and it’s not just because one is “much currency, such volatility”.
There are 1,448 cryptocurrencies around the world, by some counts. For every Bitcoin you have a programmable coin like Ethereum, or a coin that acts like a token for specific services, like Augur.
Some of these coins earn better reputations because of their usefulness, the people who made them, or the tech itself. They are not all taken seriously by investors, researchers and users.
The developers behind these cryptocurrencies are also important as they convince other people to adopt them and write new code for the technology to evolve. This new tech attracts new users into the system.
Different functions
Cryptocurrencies can be divided into several types. Cryptocurrencies like Bitcoin, Litecoin, and Dogecoin only provide basic functions such as transferring value from one party to another.
The next category are smart contract cryptocurrencies like Ethereum, Cardano, NEO, and Waves. These cryptocurrencies can be programmed, and so can become the basis for applications like games and digital markets.
The third type are cryptocurrencies designed to preserve your privacy like Monero and Zcash. These claim to be “untraceable” although transaction records are still available.
Then there are tokens, which are built with smart contracts to serve many purposes. They are often sold to raise funds to build services, and used as tickets for the services (such as Augur and Power Ledger).
Technological differences
The differing technologies in these cryptocurrencies mean that certain coins have more potential than others.
IOTA is used for “Internet of Things” devices (such as a smart kettle). But it has a special kind of blockchain (the technology that tracks transactions) and so can achieve much higher speeds of transaction and quicker confirmation of trades than Bitcoin.
Others like Nxt, and Ardor have built-in features that let users to do other things than just sending coins, such as creating marketplaces and even messaging.
People use cryptocurrencies like Zcash and Monero to settle transactions with “zero-knowledge”. This means the cryptocurrencies hide the information of the real payers and payees, and even the amount of coins transacted.
Monero has largely replaced the use of Bitcoin in exchanges on the dark web.
And smart contracts built with cryptocurrencies like Ethereum have countless potential usecases, from property transactions to digital asset management and fundraising.
The technology also means that one cryptocurrency might use significantly less electricity than another.
Limitations
The major cryptocurrencies, like Bitcoin and Ethereum, are slow because of their inability to handle massive amount of data being sent by users. The technology used to secure the data are expensive and inefficient.
Bitcoin can only handle a maximum of seven transactions per second; Ethereum can handle 15 transactions per second. Compare this with the VISA payment system, which can process up to 56,000 transactions per second.
But new entrants, such as Red Belly from the University of Sydney, might be able to solve this problem, handling up to 660,000 transactions per second.
Smart contracts can also run into problems if they contain bugs. When a decentralised organisation built on Ethereum was hacked in 2016, US$50 million in Ether was stolen.
When something achieves the success of Bitcoin we’re bound to see competitors entering the market, hoping to grab a share.
This explains the explosion in cryptocurrencies since the Bitcoin source code was released under an open licence. Anyone can copy, modify, and release a modified version of Bitcoin.
By looking at the current trend, we will see more cryptocoins in the near future.
But as we can see, “cryptocurrency” is a term that encompasses a wide range of different technologies, communities and uses. It’s all of these factors that inform whether users, investors, developers and researchers take a coin seriously.
Author: Dimaz Wijaya PhD Student, Monash University
SaaS employment solutions startup, REFFIND Limited, believes that blockchain will radically transform employee rewards programs in 2018, and has acquired a substantial stake in US blockchain leader for the global loyalty market, Loyyal Corporation, to pioneer this transformation.
The US$2.3m proposed transaction will give Reffind exclusive usage rights to Loyyal’s advanced blockchain technology in selected countries across the 4.5 billion-populated Asia-Pacific region, which they will apply to their existing employee engagement and recognition platform, Wooboard.
“Reffind is already reshaping our approach to employee engagement through our signature peer recognition program that has proven far more effective in building and nurturing a culture of engagement than alternative “top down” management-led approaches,” said Tim Lea, CEO of Reffind.
“However, employee rewards systems across the globe are still plagued by frustrations and inefficiencies that render even the most well-intentioned – and expensive – programs almost completely ineffective as a tool for retaining and engaging staff.
“The lack of transparency around determining the level and type of remuneration from employee to employee is a well-known reason why many employees resign. As an example, the period shortly following bonus season in the banking sector is the number one time disgruntled bankers quit in droves,” continued Tim Lea.
“This problem is then further exacerbated when it comes to assessing more subjective or “softer” performance characteristics, such as employee integrity, values, and culture – despite these characteristics being vital to high-performing and happy workplaces.
“Add to this an enormous amount of frustration around the timing of receiving rewards, and the limited ability for employees to spend their rewards when, how, and on what they want, and the result is an epidemic of enormously ineffective rewards schemes being given in some of the largest corporations across the world.
“Effectively companies are throwing away thousands – if not millions – of dollars globally,” said Tim Lea.
The San Francisco-based Loyyal Corporation has quickly attracted Fortune 500 clients since forming in just 2014, including the likes of Deloitte, Dubai Points, IBM, iNet, a large global airline, and a large US Financial Services company.
It was the first company globally to apply the breakthrough advantages of its proprietary blockchain network platform to the global loyalty and rewards industry. It is believed that the inherent characteristics of the advanced blockchain technology will allow employers to overcome the fundamental issues currently seen with these programs.
Blockchain allows for interoperability, or functionality across different systems of rewards, meaning employees can accrue a global system of “points” that can be spent however they wish, instead of being limited to a specific set of items or brands.
It provides complete real-time transparency over the receipt and redemption of points, with employees seeing exactly how many points they’ve accrued in real time, and being immediately able to redeem those points as they wish.
By applying this advanced technology to the points-based peer recognition functionality of Wooboard, Reffind believes it will be in a position to completely transform how organisations – from small operations to multinational conglomerates – to recognise and reward positive employee behaviour.
“As experts in employee engagement, we already understand the psychology behind motivating and retaining staff,” said Tim Lea. “By acquiring the rights to this advanced blockchain technology, we are confident that we will kick off an employee rewards revolution in 2018.”
Reffind recently appointed a blockchain expert as its CEO, Tim Lea, brought on board a strategic global blockchain industry advisor, Matthew Hamilton, and voted in a local blockchain authority to the board, David Jackson.
The Financial Conduct Authority (FCA) is the conduct regulator for 56,000 financial services firms and financial markets in the UK and the prudential regulator for over 18,000 of those firms. The FCA recently published feedback on its Discussion Paper on Distributed Ledger Technology (DLT).
In April 2017 The FCA announced that it was seeking stakeholder views on the potential for future development of DLT in the markets the FCA regulates.
The FCA received 47 responses from a wide range of market participants including regulated firms, national and international trade associations, technology providers, law firms and consultancies.
DLT has come to greater public prominence as it underpins digital currencies such as Bitcoin. This paper is not about Bitcoin or other so-called cryptocurrencies. Rather its remit is to consider the range of ways that DLT can impact on financial services and the regulatory implications.
Respondents expressed particular support for the FCA maintaining a ‘technology-neutral’ approach to regulation and welcomed the FCA’s open and proactive approach to new technology, including our Sandbox and RegTech initiatives.
The feedback also suggested that current FCA rules are flexible enough to accommodate the use of DLT by regulated firms and no changes to specific rules were proposed. Many respondents suggested that DLT solutions could deliver regulatory requirements more efficiently than current systems, substantially reducing costs for firms and regulators alike.
However, some respondents doubted the compatibility of permissionless networks (permissionless networks allow general public visibility of transactions online and are open for broad participation whilst permissioned networks typically feature a ‘gatekeeper’ who controls access) with our regulatory regime. Based on the feedback and its own work, overall the FCA is open to all forms of deployment of DLT (including both permissioned and permissionless DLT networks) provided the operational risks are properly identified and mitigated.
The FCA will continue to monitor DLT-related market developments, and keep its rules and guidance under review in the light of those developments. It will work collaboratively with industry, HM Treasury, the Bank of England, the Information Commissioner’s Office and other UK bodies to ensure a co-ordinated approach towards DLT in the UK. At an international level, the FCA will work closely with national and international regulatory bodies to shape regulatory developments and standards.
On the Initial Coin Offering (ICO) market, the FCA will gather further evidence and conduct a deeper examination of the fast-paced developments. Its findings will help to determine whether or not there is need for further regulatory action in this area beyond the consumer warning issued in September. In the meantime, the FCA highlights how an ICO-related business proposition needs to be designed to satisfy the ‘consumer benefit’ condition for access to the FCA’s Innovate facilities.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
“The original paper opened a discussion about DLT and the volume and breadth of responses we received from the industry demonstrates the significance of this issue. DLT has the potential to transform practices across a number of markets, sharpening competition and improving risk management. At the same time we have to be alive to the risks of certain applications of it. We will continue to work with a range of agencies and firms to ensure a co-ordinated approach to the use of DLT in financial services.”
DigitalX Ltd, has announced today that the ASX-listed blockchain software and initial coin offering corporate advisory firm, is dipping its toes into cryptocurrency exchanges.
The Perth-based company has more than $18 million in liquid assets, including $5 million in cash, more than $10 million in bitcoin and about $2 million in ether, power ledger (POWR) and etherparty (FUEL).
The Board of DigitalX has initially approved the use of up to $1 million for the provision of market making services, offering both a buy and a sell price.
The company has begun a risk of cryptocurrency exchanges, with a focus on the Australian marketplace.
DigitalX will also utilise arbitrage trading to take advantage of mispricing across approved exchanges.
Market making will involve providing liquidity to both sides of the cryptocurrency market while maintaining a small open position in the asset being traded.
DigitalX will maintain bid and ask limit orders below and above the spot price. These orders are regularly cancelled and updated as the spot price changes.
The company says this strategy is expected to produce the best results when price volatility is high.
DigitalX says it doesn’t require an Australian Financial Services License to buy and sell the company’s digital currency on digital currency exchanges under the current regime.
“DigitalX has a strong track record dating back to 2014 as one of the leading liquidity providers in the Bitcoin marketplace, supplying wholesale Bitcoin liquidity to exchanges, commercial operators and institutions,” says DigitalX CEO Leigh Travers.
“We wound down our trading desk last year due to a lack of funding. However, our strong financial position, together with the appreciation in the value of Bitcoin, has allowed us to reignite this service.”
The company in June announced a $4.35 million investment from Blockchain Global Limited.
DigitalX decided to take $2 million of the investment in bitcoins rather than Australian Dollars.
At last report, the company held 453 Bitcoins. At today’s price of $US16,838, DigitalX’s holding would be worth $USD7.63 million.
Bitcoin may be the most famous example of a blockchain in use, but it is actually a rather unimaginative way to use it.
The blockchain is finally starting to fulfil its promise as a game-changing technology, a kind of infrastructure for record-keeping. To facilitate movement of value (such as money) and changes in ownership (shares, for example), and even to manage online identities.
The Australian Stock Exchange (ASX) has announced that it will use a blockchain-based system to record who owns shares of listed companies, and to keep track of transactions and settlements when people buy and sell shares.
The move comes as the price of Bitcoin has risen more than US$14,000 in the past year. Yet Bitcoin does not really exploit the new databases and record-keeping infrastructure that blockchain technology makes possible.
The blockchain is also called a “public” or “distributed” ledger. Think of a spreadsheet that is publicly available to view, and simultaneously held on numerous computers. When someone transfers a Bitcoin, it is verified by the system, encrypted, and a new line (or “block”) is added to the spreadsheet.
The ASX’s blockchain will replace the ASX’s CHESS (Clearing House Electronic Sub-registry System) system. Currently, the ASX requires each trade to be verified against the ASX’s centralised database of ownership records and reconciled with payments.
So while trades take place in fractions of a second, the actual clearance (making sure who owns what) and settlement (the transfer of money and shares) is cumbersome, slow, expensive, and prone to human error.
The ASX’s blockchain will greatly simplify this process. Instead of having to reconcile trades against a centralised database, the verification of ownership and settling of accounts can be done directly between participants (as is done with Bitcoin trades). This is much simpler, faster and more secure.
A monumental shift
The fact that the ASX’s blockchain announcement made headlines around the world shows what a big leap forward this is.
The ASX’s blockchain will streamline the settlement process, improving productivity and therefore reducing costs in the Australian stock market. This means that our financial markets will work better, offering an immediate benefit to Australia’s economy.
Exchanges are also a global business, and the adoption of blockchain technology in Australia’s major exchange means that it has a competitive edge over other exchanges.
Companies choose where to list, based on a variety of factors including the quality of the exchange technology. More business for the ASX will translate into more local jobs.
One potential downside of the ASX adopting the blockchain, however, is that some workers who currently process settlements on the ASX may lose their jobs. Some financial companies that currently benefit from the slow settlement process, such as brokerage firms, will also lose out.
But the ASX’s move is just scratching the surface of what blockchain technology can do to the Australian financial sector.
The same argument that applies to the ASX – that the blockchain is more efficient and productive than existing record-keeping and transaction processes – can also be extended to other exchanges, such as bond markets.
In other words, the ASX’s blockchain is just the beginning of a technological transformation of Australia’s financial markets.
Blockchains will also make these exchanges more attractive to build services on, such as for managing wealth. This is a further benefit for consumers and the broader finance industry, not purely from lower prices also from the possibility of new products and services.
But how is any of this even possible in the first place? Part of the credit must go to Australian regulators. They created the environment for this huge shift in technological practice.
Australia is now leading the adoption of the blockchain, despite it being a US-built technology. It is similar to how African telecommunications companies are leading the way in mobile payments, even though Finland created modern mobile phones with companies like Nokia.
Even if you’re not excited about new technology in the Australian finance industry, its global competitiveness, or even our regulatory agility, the ASX announcement is a harbinger of what adoption of blockchain technology will increasingly look like.
Author Professor of Economics, RMIT University
According to Morningstar analysts, the ASX’s decision to move its cash equities clearing and settlement system (CHESS) to distributed ledger, or blockchain, technology would further strengthen the exchange’s “strong competitive position”.
“Although DLT has enormous potential, few real-world examples of DLT use have emerged which makes ASX somewhat of a leader in the space, being the first stock exchange to commit to DLT in a meaningful way,” the report said.
The new system would have a number of benefits for stakeholders and stockbroking firms in the form of administrative savings as well as “richer, more timely and more accurate data”.
“ASX currently generates around AUD 100 million or 13 per cent of group revenue from clearing and settlement of cash equities which we expect to benefit from the new system via the monetisation of new functionality and services.”
The adoption of blockchain technology would further cement the ASX’s protection against competition, identified as “regulation and network effects”, the report said.
“The federal government and regulators have sought to increase competition for nearly a decade, but the process of regulatory reform is slow and still has many obstacles to overcome.
“A government report found that even if competition were allowed in cash equities clearing, competitors are unlikely to emerge, as the regulatory requirement to maintain operations and regulatory capital in Australia reduce potential synergies for overseas clearinghouses.”
And even if the regulatory barriers were removed, a ‘network effect’ would still provide the ASX protection against competition, the report indicated.
“Competitors can easily create the technology required for a rival exchange, but investors are unlikely to switch to a less liquid market.”
The report pointed to the attempt of the “sole viable alternative exchange to the ASX”, Chi-X, to launch a rival equities exchange in 2011, which only attracted market share of 10 per cent and “appear[ed] to plateau due to a lack of market depth”.
Furthermore, the technical aspect of integrating local market participants such as stockbrokers would then create “switching costs”, which would also dissuade them from moving to another securities exchange.
However, the report also signalled that lack of competition had served to somewhat “undermine” the ASX as it led to “a culture that lacks innovation and efficiency”, and that blockchain could serve to pose a “material threat”.
Nonetheless, the ASX’s willingness to explore the implications of new technologies, capital-light business model, high dividend payout ratios, lack of appetite for acquisitions, debt-free balance sheet and strong cash conversion all meant it had secured a “monopoly in the Australian primary listed equity market”.