ASIC Sues ASX Over Alleged Misleading Statements on CHESS Replacement Project

The Australian Securities and Investments Commission (ASIC) has taken legal action against the Australian Securities Exchange (ASX), the country’s stock exchange operator, over allegations of misleading statements regarding the replacement of its clearing and settlement system, the Clearing House Electronic Subregister System (CHESS).

ASIC claims that ASX misled the market with announcements made in February 2022, stating that the CHESS replacement project was “on-track for go-live” in April 2023 and was “progressing well.” However, the project was later delayed and ultimately abandoned, leading to significant costs for ASX and market participants.

ASIC Chair Joe Longo stated that the regulator believes ASX misled Australians about the progress of the project, calling it a “collective failure” of the board and executive team. ASIC Deputy Chair Sarah Court emphasized the importance of holding ASX accountable for the alleged misconduct, seeking declarations of contraventions of the law and yet-to-be-determined penalties.

The case is seen as crucial for ensuring the technological and operational resilience of market participants, with Court highlighting the significance of replacing critical national infrastructure. ASX boss Helen Lofthouse acknowledged the seriousness of the allegations and stated that the bourse operator would cooperate with ASIC’s investigation.

The legal action against ASX underscores the importance of transparency and accountability in the financial markets, as regulators strive to uphold integrity and trust in the industry. Stay tuned for updates on this developing story as it unfolds in the Federal Court.