The Australian Securities and Investments Commission (ASIC) has commenced proceedings against the Australian stock exchange ASX for allegedly making misleading statements related to the replacement project of its clearing and settlement systems (CHESS).
Joe Longo
The project, first announced in 2016, was once seen as the poster child of innovation within the market infrastructure and post-trade space, being the first blockchain project launched amid an era of belief that the technology could revolutionise the plumbing of the financial services industry.
Following years of delays, ambiguity and market criticism, ASX abandoned the project in November 2022.
In the new lawsuit, ASIC alleges statements made in ASX announcements on 10 February 2022 that the project remained “on-track for go-live” in April 2023 and was “progressing well” were misleading.
ASIC alleges these statements implied the project was tracking to ASX’s announced project plan, which included a go-live date of April 2023. ASIC alleges those representations were misleading and deceptive because, at the time of the announcements, the project was not tracking to plan and ASX did not have any reasonable basis to imply the project was on track to meet future milestones.
Joe Longo, chair of ASIC, said: “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.”
Longo added that ASX’s CHESS replacement is a technology project of fundamental significance, replacing critical national infrastructure crucial to the operation of the Australian economy.
“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.”
ASIC said it is yet to determine what penalty it will seek for the alleged contraventions.