ASX Fined $20.5mn for Misleading Conduct

The Federal Court of Australia has ordered the Australian Securities Exchange (ASX) to pay an A$20.5 million fine for misleading the market regarding its CHESS replacement project.

The penalty concludes civil proceedings brought by the Australian Securities and Investments Commission (ASIC). The order follows ASX’s admission that a February 2022 market announcement stating its CHESS replacement project was “progressing well” was misleading. That announcement was issued just six weeks before ASX disclosed a strong likelihood of delays.

The project, launched in 2016-17, aimed to replace CHESS, the clearing and settlement system underpinning Australia’s equity markets, with a new platform built on distributed ledger technology. ASX paused the project in late 2022, writing off roughly A$250 million in project costs, before announcing a revised two-stage solution the following year.

“Today’s penalty reflects the seriousness of ASX’s misleading conduct about a project central to the stability of Australia’s financial system,” said ASIC Chair Sarah Court. “Listed entities must be accurate and transparent when updating the market on significant projects ... For market operators, that responsibility is even greater, given their role in maintaining critical market infrastructure and ensuring confidence in Australia’s financial system.”

Justice Markovic, who delivered the decision, explained that ASX “is a gatekeeper for preserving the integrity of, and confidence in, Australia’s financial system and should have been setting a benchmark for accuracy and transparency in its own market disclosures.”