ASIC Takes Legal Action Against ASX Over CHESS System Delay

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

On February 10, 2022, ASX had publicized that the CHESS replacement was “on track for go-live” by April 2023. However, subsequent developments painted a different picture, prompting sharp criticism and legal actions from the Australian Securities and Investments Commission (ASIC).

ASIC's complaints arise from reassurances given by the ASX suggesting that the project was "progressing well." Yet, by late March 2022, ASX consulted Accenture, whose findings led to the project's shelving and $250 million in write-offs.

In his statement unveiling the court action, ASIC chair Joe Longo remarked, “There was a collective failure by the ASX board and senior executives.” He underscored that ASX’s promises are vital for trust within the financial markets.

“Companies and investors rely heavily on ASX’s communications regarding their operations to make investment decisions. A breach of confidence at this level induces extensive repercussions across the market,” Longo added.

The legal actions come on the heels of a pre-existing penalty amounting to $1,050,000 paid by ASX after an ASIC investigation scrutinized its adherence to market integrity rules.

Moreover, criminal charges were recently directed at four individuals allegedly involved in a "pump and dump" operation via Telegram, spotlighting ASIC's dedication to regulatory compliance.

The CHESS system, originating in 1994, initially replaced a laborious paper-based clearing approach. The award-winning transaction clearing system proved instrumental for brokers who floated the exchange in 1998, now known as ASX Ltd. The shift from manual to digital processes was seen as a massive leap in operational efficiency at the time.

ASX had planned to replace the decade-old CHESS system beginning in 2016, targeting an April 2021 completion date. However, the project timeline was redefined to April 2023 after re-planning in March 2020.

Subsequently, Digital Assets, ASX’s advisory consultants, flagged the project with a “red RAG” status from June to November 2021, indicating severe risks to timely delivery without appropriate mitigations.

This red status, an IT project management term for serious concerns, was documented and presented to ASX’s audit committee in early February 2022. Nonetheless, ASX published its half-yearly report a week later, asserting that the project was "tracking to plan and progressing well," a statement that ASIC now disputes.

Longo emphasized, “We will argue that the project was not ‘progressing well’ as of February 10, 2022. The postponement and subsequent pause in November 2022 have significantly impacted ASX and the market participants dependent on these assurances.”

Highlighting the necessity for transparent and efficient management of such pivotal projects, Longo remarked, “Ineffective handling erodes confidence in Australia's market's ability to attract investment.”

The original article was published by Neale Prior for The West Australian

Published:Thursday, 15th Aug 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Finance News

Clear

Interest Rate Increases: Challenges for First Home Buyers in 2026

10 Jun 2026: Paige Estritori

Recent interest rate hikes by the Reserve Bank of Australia (RBA) have introduced new challenges for first home buyers, affecting borrowing capacity and market confidence. - read more

Surge in Personal Loans as Australians Grapple with Rising Living Costs

09 Jun 2026: Paige Estritori

In the first quarter of 2026, Australians have borrowed a record $5.1 billion in personal loans, according to the Australian Bureau of Statistics. This significant increase reflects the mounting financial pressures faced by households due to escalating living costs. - read more

Australian Government Fast-Tracks $6.15 Billion to Bolster Business Resilience

09 Jun 2026: Paige Estritori

In response to ongoing global disruptions affecting local industries, the Australian government has expedited the release of $6.15 billion in concessional capital to support businesses. This initiative aims to protect manufacturing and supply chain enterprises from market volatility and to encourage investments in production capacity and decarbonisation efforts. - read more

Plenti Group Achieves Record Profit Growth in FY26

09 Jun 2026: Paige Estritori

Plenti Group Limited has reported a remarkable 117% increase in Cash Profit Before Tax (PBT), reaching $30.8 million for the financial year ending 31 March 2026. This substantial growth underscores the company's successful execution of its strategic objectives and the robustness of its digital lending platform. - read more

Record High Personal Loan Borrowing Amidst Rising Living Costs in Australia

09 Jun 2026: Paige Estritori

In the first quarter of 2026, Australians have borrowed a record $5.1 billion in personal loans, as reported by the Australian Bureau of Statistics. This significant increase reflects the mounting financial pressures faced by individuals due to escalating living costs. - read more

Click for more Finance News