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The Australian Securities Exchange(ASX) announced on Thursday that it’s replacing its existing clearing and settlement system for equities trades with a new blockchain-based model.

The new distributed ledger technology (DLT) will operate on a secure private network and is being developed with New York-based blockchain firm, Digital Asset (DA).

“Today’s decision follows the successful build of enterprise-grade DLT software for core equity clearing and settlement functions, and the completion of extensive suitability testing by ASX and DA over the past two years,” the ASX says in a news release, noting that its testing included two independent third-party security reviews.

Consultations on the implementation on the new system will continue in 2018, it says. Details of the proposed transition are expected to be proposed by the end of March 2018.

“The ASX has been carefully examining distributed ledger technology for almost two-and-a-half years, including the last two years with Digital Asset, in order to understand its potential application,” says Dominic Stevens, CEO and managing director of the ASX, in a statement. “Having completed this work, we believe that using DLT to replace [the existing system] will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets. While we have a lot more work still to do, today’s announcement is a major milestone on that journey.”

Adds Blythe Masters, CEO of Digital Asset, in a statement: “After so much hype surrounding distributed ledger technology, today’s announcement delivers the first meaningful proof that the technology can live up to its potential. Together, DA and our client ASX have shown that the technology not only works, but can meet the requirements of mission critical financial infrastructure.”

The ASX also announced that it will exercise its right to participate in DA’s recent Series B fundraising, subscribing for US$3.5 million in convertible notes.

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