ASIC Launches Probe into ASX Governance Failures and Risk Management

Australia's financial watchdog, the Australian Securities and Investments Commission (ASIC), has launched a formal investigation into the Australian Securities Exchange (ASX) over repeated governance, capability, and risk management failures. The inquiry will be conducted by an independent expert panel and aims to identify shortcomings within ASX's operational framework, with outcomes and recommended actions to be made public.

ASIC Chair Joe Longo said the investigation was prompted by “repeated and serious failures” at ASX, emphasizing the need to restore public and investor confidence. “The inquiry provides an opportunity for ASX to bolster market trust,” he added.

ASX acknowledged the probe in a separate statement. Chairman David Clarke said the company has been working on a transformation strategy but admitted that certain incidents had eroded trust in the exchange operator.

The investigation follows longstanding issues with ASX’s CHESS clearing and settlement system. The platform experienced a significant breakdown in December and has been at the center of controversy. In 2023, ASIC took ASX to court for allegedly issuing misleading statements about its CHESS replacement project, which had aimed to introduce blockchain-based technology. However, the six-year-long project was scrapped in November 2022 due to concerns over complexity and scalability.

The renewed scrutiny highlights ongoing challenges at ASX and underscores the regulator’s push for higher standards in governance and transparency across Australia’s financial infrastructure. The outcome of the probe may lead to stricter oversight and could reshape future technology strategies within the exchange.

The ASIC investigation marks a critical juncture for ASX, whose credibility and modernization efforts are now under intense examination.