The Australian Securities and Investments Commission (ASIC) is launching an inquiry into the Australian Securities Exchange (ASX) group, citing ongoing concerns about the resilience of critical market infrastructure operated by the company.
The regulator said its review will focus on the ASX’s “governance, capability and risk management frameworks and practices.”
The review, which will be led by an expert panel, will make recommendations for addressing any deficiencies it uncovers.
“ASX operates Australia’s critical markets infrastructure. Investors and market participants deserve to have absolute confidence that ASX is operating soundly, securely and effectively,” said ASIC chair Joe Longo in a statement.
The regulator said the decision to launch a review of the exchange “follows repeated and serious failures at ASX” — such as a settlement failure incident last year — which resulted in ongoing concerns at ASIC and the Reserve Bank of Australia.
“ASX is ubiquitous. You simply cannot buy and settle on the Australian public equities and futures markets without relying on ASX and its systems. The inquiry provides an opportunity for ASX to bolster market trust,” Longo said.
“We acknowledge the seriousness of this action, and ASIC’s inquiry will have our full co-operation,” said ASX chairman David Clarke in a statement.
“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,” he said. “We welcome the opportunity for independent parties to review the work underway and advise on what more we can do.”
“This is a wide-ranging inquiry, and it will provide an independent and transparent view of the work we have done and the work we still have to do. It will be critical to ensuring our stakeholders can have trust and confidence in ASX,” said Helen Lofthouse, CEO and managing director at the ASX.