ASIC Launches Wide-Ranging Inquiry into ASX Governance and Risk Controls
ASIC has initiated a comprehensive compliance inquiry into ASX’s governance, risk management, and operational capabilities, folding its previous CHESS incident probe into this broader review. ASX pledges full cooperation amid ongoing technology upgrades.
- ASIC commences compliance assessment and inquiry into ASX market and clearing licensees
- Focus on governance, capability, and risk management frameworks within ASX Group
- Investigation into December 2024 CHESS Batch Settlement Incident discontinued and integrated into broader inquiry
- ASX highlights ongoing technology modernisation and transformation strategy
- Potential financial impact of inquiry costs not yet reflected in ASX’s FY26 guidance
ASIC Steps Up Regulatory Oversight
The Australian Securities and Investments Commission (ASIC) has escalated its scrutiny of ASX Limited by launching a broad compliance assessment and inquiry into the obligations of ASX’s market licensees and clearing and settlement licensees. This move signals heightened regulatory attention on the governance, capability, and risk management frameworks that underpin Australia’s critical market infrastructure.
ASIC’s inquiry will be supported by an expert panel tasked with examining ASX’s internal practices and controls, a clear indication that the regulator seeks an independent and thorough evaluation of the exchange’s operational resilience and governance culture.
ASX Responds with Commitment and Transparency
ASX Chairman David Clarke acknowledged the seriousness of ASIC’s action, emphasizing the exchange’s full cooperation. Clarke pointed to the company’s ongoing transformation strategy, which includes initiatives aimed at strengthening culture, operational risk management, and technology resilience. He also conceded that past incidents have eroded trust, underscoring the importance of the inquiry in restoring confidence.
ASX Managing Director and CEO Helen Lofthouse reiterated the critical role ASX plays in the financial system and welcomed the inquiry’s independent perspective. She highlighted that the inquiry will assess both the progress made and the challenges ahead, reinforcing ASX’s commitment to transparency and stakeholder trust.
Technology Modernisation at the Forefront
Central to ASX’s transformation is a multi-year technology modernisation program. This includes the replacement of the CHESS clearing and settlement system, upgrades to the cash market trading platform, and enhancements to derivatives trading and clearing platforms. The program also involves upgrading telecommunications networks that connect market participants to ASX systems.
These investments reflect ASX’s recognition of the need to bolster its infrastructure to meet evolving market demands and regulatory expectations. The inquiry’s timing coincides with these significant capital expenditures, adding a layer of complexity to ASX’s operational and financial planning.
CHESS Incident Investigation Consolidated
Notably, ASIC has discontinued its standalone investigation into the December 2024 CHESS Batch Settlement Incident, instead incorporating it into the broader inquiry. This consolidation suggests that ASIC views the incident as part of wider systemic issues rather than an isolated event.
ASX has indicated that its recent financial guidance for FY26 does not yet account for any costs associated with responding to the inquiry. The company is currently assessing the potential financial impact and has committed to updating the market as necessary.
Bottom Line?
ASIC’s inquiry marks a pivotal moment for ASX, with outcomes likely to influence its governance reforms and technology investments in the months ahead.
Questions in the middle?
- What specific governance or risk management weaknesses will ASIC’s expert panel identify within ASX?
- How might the inquiry’s findings affect ASX’s ongoing technology modernisation timeline and budget?
- Could the inquiry lead to regulatory sanctions or changes in ASX’s market license conditions?
