ASX fined $20.5m for misleading market on CHESS project

The Australian Securities Exchange has agreed to pay a $20.5 million civil penalty and $3 million toward the Australian Securities and Investments Commission’s legal costs after admitting it misled the market about the progress of its cancelled CHESS post-trade replacement project.

ASIC began civil proceedings in August 2024, alleging ASX presented an inaccurate picture of the blockchain-based system intended to replace the Clearing House Electronic Subregister System (CHESS). The replacement project started in 2016–17 and was due to go live in April 2023 before being abandoned in November 2022.

Regulatory filings show that on 10 February 2022 ASX told the market the project was “progressing well,” while internal documents classified the initiative as ‘red’, indicating significant unresolved issues or risks. On 28 March 2022 the exchange alerted the market there was a strong likelihood the planned go-live date would be delayed. After stopping the project in November 2022, ASX wrote off between $245 million and $255 million in development costs.

Under the settlement with ASIC, ASX admitted it had misled the market and agreed to the penalty and cost orders. The settlement resolves ASIC’s civil action without a court ruling on additional penalties or other remedies. ASIC brought the case after reviewing ASX disclosures alongside internal records that showed differences between public statements and internal assessments of the project’s status.

ASX chair David Clarke accepted responsibility for the statements that affected market confidence and acknowledged the exchange had fallen short: “The market must have confidence in what ASX says about its operations as these statements can be relied upon to make decisions. When we stopped the CHESS project in November 2022 to reassess our whole approach, that tested market confidence in ASX and called into question the nature of statements previously made. As the market operator and a steward of critical market infrastructure, our words matter. I am sorry ASX fell short. We recognise the impact this has on trust and confidence, and we take responsibility for the lessons that must be learned from that experience.”