The Australian Securities and Investments Commission (ASIC) has initiated an investigation into the Australian Securities Exchange (ASX) regarding its management of risks, governance, and capabilities. This inquiry arises from persistent concerns over the ASX’s ability to maintain reliable market infrastructure, deemed essential for a stable trading environment.
The ASIC’s investigation will focus on several recent technical failures, which the regulator links to potential governance shortcomings within the ASX. A significant aspect of this inquiry will include a review of the contentious upgrade to the ASX’s CHESS (Clearing House Electronic Subregister System), the digital platform used for tracking shareholdings and managing transactions.
Previously, ASIC had been looking into a specific incident related to the CHESS Batch Settlement from December 2024; however, that investigation will now be incorporated into the larger inquiry announced today. ASIC Chair Joe Longo emphasised the importance of this review, stating it presents an opportunity for the ASX to restore market confidence following a series of operational failures. He noted that the functionality of ASX is critical for the operation of Australia’s public equities and futures markets, suggesting that investors and market participants require assurance that the ASX operates securely and effectively.
Longo articulated the urgency behind the inquiry, referencing the ASX’s widespread influence in the market and the necessity for its systems to be robust and trustworthy. In light of the ongoing issues, an expert panel will be assembled to guide the review process, with further updates anticipated in the upcoming weeks; however, there is currently no set timeline for the inquiry’s completion.
ASX Chairman David Clarke has publicly recognised the ASIC’s inquiry, acknowledging the company’s ongoing transformation strategy aimed at improving corporate culture, risk management frameworks, and technological resilience. Clarke expressed openness to receiving independent feedback on ASX’s current initiatives and further steps to enhance trust in their operations, highlighting that while progress has been made, past incidents have caused significant damage to ASX’s credibility.
In summary, ASIC’s investigation represents a crucial step towards ensuring that the ASX fortifies its operational standards and governance practices, ensuring that it remains a reliable cornerstone of Australia’s financial market infrastructure.