Corporate regulator accuses ASX of multiple and significant shortcomings

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Australian Securities and Investments Commission (ASIC) announced today it will investigate the ASX’s risk management, capability and governance standards amid ongoing concerns over its ability to uphold a “stable, secure and resilient critical market infrastructure”.

ASIC’s inquiry will probe a series of technical failures which the regulator believes may have been caused by broader governance issues.

SYDNEY, AUSTRALIA - April 6, 2018: Financial headquarters Australian Securities Exchange (ASX) building — ASIC has launched an inquiry into the Australian Securities Exchange (ASX). Pictured: ASX headquarters in Sydney. (Shutterstock)

This will include a review of the problematic upgrade of the ASX’s CHESS settlement system.

CHESS, which stands for Clearing House Electronic Subregister System, is a computer model used by the ASX to record shareholding investments and manage share transactions.

ASIC has discontinued its investigation into the December 2024 CHESS Batch Settlement Incident.

The incident will now form part of the broader inquiry announced today.

ASIC chair Joe Longo said the review is an opportunity for the ASX to “bolster market trust” following a series of “failures”.

“ASX operates Australia’s critical markets infrastructure. Investors and market participants deserve to have absolute confidence that ASX is operating soundly, securely and effectively,” Longo said.

“ASIC’s decision to initiate an inquiry follows repeated and serious failures at ASX.

“ASX is ubiquitous, you simply cannot buy and settle on the Australian public equities and futures markets without relying on ASX and its systems.”

Australian stock exchange ASX — The probe will include a review into the problematic upgrade of the ASX’s CHESS settlement system. (Getty)

ASIC will convene an expert panel for the review and an update will be announced in the coming weeks.

There is no timeframe yet for the completion of the inquiry.

ASX chairman David Clarke acknowledged the ASIC inquiry in a statement to the media.

”We have been working hard on a transformation strategy with several of the initiatives designed to strengthen culture and capabilities, operational risk management, business resilience and technology resilience, but we acknowledge there have been incidents that have damaged trust in ASX,” Clarke said.

“We welcome the opportunity for independent parties to review the work underway and advise on what more we can do.”