ASX Settles ASIC Proceedings with $20.5 Million Penalty Over CHESS Claims

Settlement Ends ASIC Legal Battle Over CHESS Project Statements

ASX Limited (ASX) has agreed to settle civil proceedings initiated by the Australian Securities and Investments Commission (ASIC) concerning statements made in 2022 about the previous CHESS project. The dispute centred on ASX's claim that the project was 'progressing well', a representation that ASX now admits contravened provisions of the ASIC Act. The settlement includes a $20.5 million penalty and a $3 million contribution towards ASIC's legal costs, with the matter set for Federal Court approval later in FY26 or FY27.

Admission of Fault Focuses on ‘Progressing Well’ Claim

ASIC's original allegations targeted three statements from 2022, but ASX has successfully negotiated the withdrawal of claims relating to the project 'tracking to the Published Plan' and 'tracking to go-live in April 2023'. The sole admission concerns the 'progressing well' representation, which ASX acknowledges was misleading. This admission follows the abrupt halt of the CHESS project in November 2022, which shook market confidence and triggered a reassessment of ASX's communication and project management.

ASX Leadership Addresses Market Confidence and Project Reset

ASX Chair David Clarke emphasised the importance of trust in ASX’s communications, acknowledging the impact of the misleading statement on market confidence. Clarke framed the settlement as a step towards refocusing ASX on delivering the CHESS project and rebuilding trust. Interim CEO Darren Yip highlighted recent progress, noting that Release 1 of the new CHESS system was successfully launched two months ago on a modern, cloud-aligned platform. The system has since demonstrated resilience by processing elevated trading volumes amid global market volatility, underscoring the robustness of ASX’s technology modernisation efforts.

Financial Impact and Ongoing Commitments

The penalty and legal cost contributions will be recognised as significant, non-recurring items in ASX’s FY26 financials. This follows a period of elevated expenditure driven by technology upgrades and regulatory responses, including ASIC’s inquiry and related capital charges. The CHESS Partnership Program, launched in February 2023 with up to $70 million in financial support for key participants, remains a cornerstone of ASX’s strategy to secure broad market backing for the project’s completion.

Technology Modernisation Remains a Core Focus

ASX’s ongoing technology overhaul, which includes the CHESS project, is critical to its future as a market infrastructure operator. The successful deployment of Release 1, designed for scalability and cloud integration, marks a significant milestone. With Release 2 development underway targeting settlement and sub-register services by 2029, ASX aims to restore confidence and deliver a modernised clearing and settlement platform capable of meeting future market demands.