In January, the Australian Securities Exchange (ASX) launched its customer Daml sandpit, which sits within its distributed ledger technology (DLT) solutions unit.

The sandpit allows individuals and firms to familiarize themselves with the Daml smart contracting language, which is particularly important since it’s the language that the ASX’s Chess replacement project is based on. Participants in the sandpit can also start coding and developing applications.

Paul Stonham, general manager of DLT solutions at ASX, tells WatersTechnology that the exchange white-labeled Digital Asset’s test application system, Dabl, and presented it as the ASX’s Daml sandpit.

I think especially down here in Australia it is quite important for people to get used to this protocol that we’re going to be implementing [for Chess].

Paul Stonham, ASX

In February, Digital Asset rebranded Dabl to Daml Hub to better represent that it is an entrance into the Daml ecosystem. Eric Saraniecki, co-founder and head of strategic initiatives at Digital Asset, says that within the Daml network, anyone can deploy a Daml Hub anywhere in the world.

“And they’re all connected to each other, because it’s all part of the same network. It’s really important for us to find market participants and partners like ASX that will deploy one in their region, and then they will attract people into Daml Hub,” he says. (See ‘Building an open network’ in the box below)

ASX’s Stonham says the Daml sandpit has a good user interface, and there are some test applications that people can reference and learn how to deploy. “They can also work out how to start coding in Daml and get used to that language. I think especially down here in Australia it is quite important for people to get used to this protocol that we’re going to be implementing [for Chess],” he says.

He adds that the ASX has had interest from university students and academia to fintech companies and big financial services players such as Broadridge Financial Solutions, as well as international custodians and some of Australia’s larger investment institutions logging on to start developing applications.

He says the sandpit is like a graduation ceremony. “So step one, you log on to the sandpit, have a muck around. You can actually write all your code, you can deploy your app, you can test it. And, ultimately, if you’re a vendor, you can also invite others and demo your app to potential users or those with vested interest or stakeholders within or outside your organization,” he says.

Stonham says ASX’s Daml sandpit technically points to a normal database technology instead of a ledger, which is why the second phase will involve spinning up its DLT cloud environment.

Next steps

The second phase of ASX’s DLT solutions offering is to get its DLT cloud environment up and running, which will use the same VMware blockchain ledger that the Chess replacement project will be using.

Stonham says this will provide customers with a seamless transition depending on their needs.

“Some will go to the sandpit but also there will be a development environment component of the VMware cloud environment as well. So customers can choose where they want to start, depending on how advanced they are in their knowledge of Daml and the apps they want to build. But really it’s just picking up the code and deploying it in other environments. It’s reasonably straightforward and simple so no matter where a customer starts, their journey is as smooth as possible to ultimately get to production,” he says.

We’ve coined the term that we’re really doing DLT-as-a-service. We’ll be providing the ledger and managing the nodes, and providing a lot of generic or common services that customers need.

Paul Stonham, ASX

Once the DLT cloud environment is live, Stonham says there will be two components to it: the development environment and the production system.

“So we’ll say by the end of this year, our cloud environment will actually have two VMware blockchains—a development one, and a production one,” he adds.

Ultimately, ASX will be stitching the cloud environment and its on-premises environment, which Chess will be on once it goes live.

“It will be almost like a synthetic virtual single environment. So if I’m a customer with a node, it will be a hybrid cloud, on-prem—the whole DLT ecosystem. We’ve coined the term that we’re really doing DLT-as-a-service. We’ll be providing the ledger and managing the nodes, and providing a lot of generic or common services that customers need,” he says.

He equates those services to a phone’s GPS system.  

“If you think about a phone, there’s only one GPS, but 200 different maps make use of that one GPS. We’re looking at being able to move data—and obviously, we’re running a permissioned private ledger—around between applications and between different databases because ultimately within that one big environment, we can spin up multiple VMware blockchain ledgers depending on what customers want to do and what use cases are available and what the potential regulatory requirements may be for those people who have the applications,” he adds.

It is all about offering customers choice, he adds.

“So, if you want something that’s quite light, quite cost effective to start up with, you will probably start on the cloud. If you want something that’s quite heavy, at the end of the day the Chess application is just going to be an application that sits on the DLT-as-a-service like any other application. But the requirements from Chess is 20 million transactions a day—it’s all this throughput, all this storage. So it depends on what your application does, how many users you’re going to have, what your transactions are, what your load is,” Stonham says.

The on-premises environment and the DLT cloud environment will “synthetically” be a single DLT-as-a-service ecosystem.

“What we’re saying is, and predominantly for Australian and New Zealand-based use cases, provided it’s legal, anybody can do anything,” he says.

ASX is putting the DLT cloud environment “through its paces” before it opens it up to customers in early October, Stonham says.

Adjacent to Chess

Most of the applications being coded or tested in the sandpit are currently within the financial services vertical and are aligned with and adjacent to Chess. Many of these applications are looking to address corporate governance and equity back-office process improvements. So far, over 20 different firms have logged on and are getting to know the Daml smart contract language and coding and testing applications.

For example, Broadridge is looking at off-market transfers, which is the transfer of shares from one party to another. Stonham says this process is particularly manual and paper-based in Australia.

“The pain of transferring shares from my registry to my broking account at the moment involves paperwork and wet signatures. I’ve got to photocopy my IDs, get them certified, and my registry actually wants me to post all this stuff in,” says Stonham.

Broadridge is developing an application that automates a lot of the manual and paper-based processing.

Prakash Neelakantan, vice president of strategy and business development at Broadridge, tells WatersTechnology that off-market transfers were one of the problems that came up in a brainstorming exercise that looked at challenges that Broadridge’s customers in Australia and ASX’s participants are facing.

“It’s a very manual and expensive process across brokers, and [often results in] delays in the timeline, etcetera, he says. “Originally, we looked at automating this right on the ledger, but given that [the Chess replacement project] got delayed, we thought we might still solve for it and prepare the ground so that when the new system comes in, we can actually migrate it over. From a customer perspective, they won’t see much change; they will still see the same workflows.”

Broadridge is building this application in the ASX Daml sandpit. The beauty of Daml, Neelakantan says, is that it can be used with multiple back-end applications.

“It could be with ledgers like what ASX is using for Chess, or what we are using for our repo [platform]. It can also be with traditional databases, and it can work with different ledgers. The solution can be used to deal with contracts and obligations of parties, their workflows, and share information using the appropriate data wherever it is stored,” Neelakantan says.

Daml is Broadridge’s preferred language, and it gives the vendor a roadmap into the future, says Neelakantan.

“We can actually build the application quickly within this ASX environment without the need for the new Chess replacement, but integrating with the current environments. [Eventually] we will integrate this with the new environment. But the broker experience and the investor experience will be very similar. We will actually reduce the paper flow and automate the processes and also shrink the timeline for completing the transaction.”

Broadridge has already run this application as a pilot, and is now testing it for production use and what it will require from the customer’s side to integrate it into the current environment. “In the future, it will be different because once the new Chess is rolled out, integration will be much simpler because it will be directly on the DLT,” he says.

Currently, off-market transfers can take as long as a week to complete. Though this application will allow for a speedier transfer, Neelakantan says how much faster is relative.

“Even in the digital version of this process, you’ll need both parties to actually confirm. So, if the other side is not responding at all, we can’t do anything—you still need both parties,” he says. “It saves a lot of time and energy on the broker side and whoever is initiating the transaction. So maybe one party is initiating one investor’s issue transfer, and if the other side is already aware and ready, then it will actually speed up and shorten the cycle.”

He says once the system is validated with customers, it will take Broadridge four to six months to build out the full service.