The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against the Australian Securities Exchange Ltd (ASX) in the Federal Court, alleging the ASX Ltd (ASX:ASX) made misleading statements regarding the status of its Clearing House Electronic Subregister System (CHESS) project.
ASIC claims that ASX's announcements on February 10, 2022 falsely indicated that the project was "on-track for go-live" in April 2023 and was "progressing well." ASIC argues that, at the time of the announcements, the project was not meeting its planned milestones, and ASX lacked a reasonable basis to suggest it was on track.
“ASX’s statements go to the heart of trust in the integrity of our markets. We believe this was a collective failure by the ASX Board and senior executives at the time,” ASIC chair Joe Longo, said.
“Companies and market participants rely on what the ASX says about its operations to make their own decisions and investments. We expect the ASX to be a place to list and invest with confidence. When the ASX falls short, it has wide-ranging consequences across the market.”
Longo emphasised the significance of the CHESS replacement project as critical national infrastructure and criticised ASX for failing to accurately report the project's status.
“Its critical importance was all the more reason ASX needed to ensure it told the Australian public the truth about how the project was tracking and whether it would be completed on time.”
“We allege that the true state of affairs as at February 10, 2022 was that the project was not ‘progressing well’, contrary to ASX’s announcement,” he added.
Longo highlighted that the delay and subsequent suspension of the project in November 2022 resulted in substantial costs for ASX and other market participants who had relied on the company's assurances.
ASX acknowledges proceedings, looks forward
ASX paid a penalty of $1.05 million earlier this year in light of an ASIC investigation into its compliance with the market integrity rules.
“We recognise the significance and serious nature of these proceedings. We cooperated fully with ASIC’s investigation and are now carefully reviewing and considering the allegations,” said ASX chief executive Helen Lofthouse in statement today.
“We play a critical role at the centre of Australia’s financial markets, and continue to focus on supporting and delivering for customers. We are committed to taking ASX forward, and have made strong progress as an organisation over the past two years.
“ASX will keep the market informed in accordance with its continuous disclosure obligations.”
ASX is expected to release its full-year financial results shortly, with its shares last valued at $65.87.