The Australian Securities and Investment Commission (ASIC) has levelled accusations of making misleading comments at Australia’s largest share market operator, ASX Ltd, in relation to its Clearing House Electronic Subregister System (CHESS) replacement project.
These allegations concern statements by the ASX in February 2022 that the project was “on-track for go-live” and “progressing well” for its slated launch in April 2023.
ASIC says those statements were misleading as the project was not on schedule at the time the announcement was made and the ASX did not “have any reasonable basis to imply the project was on track to meet future milestones”.
Market-wide consquences
“ASX’s statements go to the heart of trust in the integrity of our markets. We believe this was a collective failure by the ASX Board and senior executives at the time,” ASIC chair Joe Longo said.
“Companies and market participants rely on what the ASX says about its operations to make their own decisions and investments.
“We expect the ASX to be a place to list and invest with confidence. When the ASX falls short, it has wide-ranging consequences across the market.”
ASIC is seeking declarations, an adverse publicity order, punitive penalties and costs against the ASX.
ASX under the microscope
"We recognise the significance and serious nature of these proceedings,” ASX managing director and CEO Helen Lofthouse said.
“We cooperated fully with ASIC’s investigation and are now carefully reviewing and considering the allegations.
"We play a critical role at the centre of Australia’s financial markets and continue to focus on supporting and delivering for customers.
“We are committed to taking ASX forward and have made strong progress as an organisation over the past two years."
In March the ASX paid a penalty of just over $1 million, marking the first infringement notice issued to a market operator by the regulator.
The notice was issued in relation to rule breaches concerning pre-trade transparency occurring on 8,417 occasions between April 4, 2019, and December 22, 2022, as a result of an incorrect system configuration.
ASIC also found “there was no evidence of other losses suffered as a result of the conduct” but noted the damage to public confidence in the market’s operational integrity.
The allegations certainly come at an interesting moment for the ASX, which will release its 2024 financial year results on Friday.