Ann: iSignthis and NSX Limited enter into ClearPay Joint Venture, page-356

So I've had a closer look at this.

I see this as another example of ISX picking up Tier 1 licencing/infrastructure out of the bargain bin. NSX have a Tier 1 Market Operator Licence in Australia. ISX are now a part owner in that at 13% for $4.2mil with the option to come right up to the max 19.9% without triggering the 20% rule (Don't rule out a full takeover of NSX by ISX some time into the future).

ISX gain part ownership/access to this market operator licence in a relatively low risk way.

ISX pay NSX $4.2mil for the stake in NSX

ISX and NSX create JV vehicle company Clearpay.

ISX get a 59% stake in Clearpay for no $$$ outlay - just the contribution of their intellectual property (Dropping to 50% on NSX achieving a successful second raise).

NSX have to fund Clearpay to the tune of $4.5mil.

Clearpay pays ISX subsidiary Probanx a fee for integration of Paydentity, Probanx and the like into the NSX platforms and the development of this block-chain based Clearing and Settlement system.

It wouldn't surprise me, given the level of work involved, if that fee isn't far off that $4.5mil that NSX are tipping into Clearpay.

So what are you left with from ISX perspective:

Potentially, once integration fees are paid by Clearpay to ISX - a free carry position of 13% in NSX and 59% in Clearpay.

All costing zero to ISX - so worst case if it doesn't work out, ISX get their invested money back through integration fees.

Once everything is up and running I'd imagine ISX/Clearpay would be clipping the ticket of funds flowing through the system such as through the RBA ESA account, the DVP system etc etc.

This is all going to be coming off a very low base as NSX is next to nothing right now but with improved and differentiating technology they may become a more attractive offering - Of course not likely to take much in the way of market share from the ASX, but even a small inroad would be huge and it would be good to see a truly competitive landscape.

I wonder if Chi-X would be interested in an alternative provider for their clearing and settlement?

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As for the broader state of play, I still see there are the obvious issues that appear primarily centred around historical continuous disclosure. I still think we are waiting on ASIC as to what/if anything happens there.

The announcement around NSX and Clearpay does suggest the narrative of ASX seeing ISX as a potential competitor in the lead up to the suspension as having some merit now. People will argue is it a chicken/egg situation. Has ISX developed a way to try and get themselves out of trouble by going down this path in recent months, since suspension? To accept that would require you to think that JK has blatantly lied very recently about having had discussions with APRA, ASIC and RBA in early 2019 about developing a competitive alternative to ASX Austraclear.

Ultimately, the granting of the various licences from ASIC, APRA and RBA would be a clear indicators to me that what JK is saying is true. Otherwise, these government bodies would hardly go out and licence ISX with the CEO on record saying he made proposals to them that never actually happened, if that were infact the case.

Interesting times.... may be worthy of a movie this plot - another revenue stream maybe?