Australia’s key financial regulators have delivered a sharp warning to the Australian Securities Exchange (ASX), criticising its handling of last year’s CHESS outage and raising doubts about its ability to manage essential market infrastructure.
In separate letters sent late last week, the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) described the December 2024 incident as unacceptable and called for urgent improvements. The outage occurred during a quieter trading period in the lead-up to Christmas, when a long-standing weakness in the CHESS system caused it to crash, halting settlement of trades and leaving billions of dollars in transactions in limbo.
The RBA downgraded ASX’s compliance with Financial Stability Standards to “not observed” following a special review, while ASIC instructed the exchange to appoint external experts to review the legacy system. The review, ASIC said, must “provide greater confidence to regulators, and the public, in the stability and operational resilience of the current CHESS platform”. ASX has 150 days from appointing the experts to report back.
In a joint letter, RBA governor Michelle Bullock and ASIC chair Joe Longo said they were “deeply disappointed” and warned: “The regulators are increasingly concerned that ASX may not be fulfilling those responsibilities.” They also flagged that, if needed, they could use new powers to take control of the ASX.
While they acknowledged some efforts to improve culture, governance and risk management, they noted the CHESS incident showed “the pace of change at ASX is too slow”.
ASX chair David Clarke said the exchange recognised “how disappointing” the outage had been and had begun rolling out a company-wide action plan.
“Management has commenced work to establish a new enterprise-wide program that goes beyond immediate actions to respond to the settlement incident and this will comprehensively address the regulatory concerns and expectations,” he said.
Chief executive Helen Lofthouse added that a new CHESS platform was on track for delivery in March and April 2026, with work continuing on both the replacement and the current system.
“The new CHESS system is being built on modern, modular architecture and is benefiting from extensive stakeholder consultation to ensure it will meet the needs of the market as a whole,” she said.