ASX hit with $20.5 million penalty

The Federal Court has ordered ASX Limited (ASX) to pay a $20.5 million penalty for its misleading statement about the progress of its CHESS replacement project.

The penalty decision follows ASX’s admission that its 10 February 2022 market announcement stating the CHESS replacement project was “progressing well” was misleading and exposed market participants to the risk of financial harm.

The CHESS replacement project was a critical financial infrastructure project to replace the Clearing House Electronic Subregister System (CHESS) operated by ASX - a public company that operates the country's similarly named primary securities exchange - with a new system using distributed ledger technology.

ASX commenced the project in 2016-17 and planned for it to ‘go live’ in April 2023, but on 28 March 2022, about six weeks after telling the market the project was “progressing well”, ASX announced there was a strong likelihood the project would be delayed.

On 17 November 2022, ASX paused the project and derecognised approximately $245-$255 million (pre-tax) in its own project costs.

In November 2023, ASX announced a new CHESS replacement solution would be delivered in two releases, with clearing services in Release 1 and settlement and subregister services in Release 2.

Release 1 went live on 20 April 2026.

ASIC chair Sarah Court said the penalty reflects the seriousness of ASX’s misleading conduct about a project central to the stability of Australia’s financial system.

"Listed entities must be accurate and transparent when updating the market on significant projects, particularly where delays and risks have the potential to affect confidence, investment and decision-making across the market," she said.

"For market operators, that responsibility is even greater, given their role in maintaining critical market infrastructure and ensuring confidence in Australia’s financial system,’ the Chair said.

In delivering her reasons for the penalty, Justice Markovic said 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.

"As the operator of critical market infrastructure, [ASX] is expected to adhere to high standards. In light of the contraventions, it fell short of those standards," Justive Markovic said.

ASX was also ordered to pay $3 million toward ASIC’s costs.