Australian exchange firm, ASX Limited, admitted to misleading the market by overstating its progress on a core technology project — and agreed to pay A$23.5 million in sanctions and costs to regulators.
Back in early 2022, the ASX claimed that its project to develop and implement a new clearing system — to replace its existing CHESS system with a new blockchain-based alternative — was “progressing well” ahead of its planned launch in April 2023.
However, six weeks later, the exchange admitted the project would be delayed, amid numerous unresolved technical issues, and it later paused the project entirely.
In August 2024, the Australian Securities and Investments Commission (ASIC) launched a civil case against ASX in federal court, alleging that it violated securities law by making misleading statements about the project in announcements to the market.
Now, the ASIC and ASX have reached a proposed resolution that will see the exchange admit to breaching the rules by misleading the market, which exposed investors to potential harm.
The exchange’s statement “risked undermining confidence in Australia’s financial markets,” said ASIC chair, Sarah Court, in a statement.
“These admissions concern the accuracy of disclosures to the market about a significant and complex project that carried real consequences for confidence, planning and investment across the market,” she added. “Accurate and timely disclosures are fundamental to maintaining trust in Australia’s financial markets, particularly from entities that operate core market infrastructure.”
As part of the proposed resolution, which is subject to court approval, they will ask the court to impose a A$20.5 million penalty on the exchange, and to order it to pay A$3 million towards the regulator’s costs.
The court will consider the proposed resolution at a hearing scheduled for July 1.
“As the market operator and a steward of critical market infrastructure, our words matter. I am sorry ASX fell short. We recognize the impact this has on trust and confidence, and we take responsibility for the lessons that must be learned from that experience,” said ASX chair, David Clarke, in a release.
“The CHESS project is now on firmer footing, and our decision to settle this matter reflects the desire by the board to focus ASX on building for the future while maintaining the work still required to build confidence and deliver for the market. We will continue the reset across the group, informed by the findings of the ASIC inquiry report delivered earlier this year,” he added.
Interim CEO Darren Yip said that the infrastructure project, “remains a critical priority” for the group.
“Just two months ago, the team successfully delivered release 1 of the new system, providing clearing services on a modern, cloud-aligned platform,” he reported.
Since then, the clearing system, “… has continued to perform strongly, consistently processing elevated trading volumes during periods of heightened global market volatility — underscoring its resilience and scalability,” he added.