The penalty for the ASX has not yet been set, but it is likely to be no less than A$500 million.
Australia's largest stock exchange is "in trouble" due to a controversial blockchain project. Photo: The Australian
The Australian Securities Commission (ASIC) has filed a lawsuit against ASX Limited, the country’s largest stock exchange. The regulator accused ASIC of making “misleading and deceptive” statements about the progress of its blockchain project, which is intended to replace its aging Clearing House Electronic Subregister System (CHESS).
ASIC has commenced proceedings in the Federal Court against Australia's largest market operator, ASX Limited, for allegedly making misleading statements related to its Clearing House Electronic Subregister System (CHESS) replacement project https://t.co/yyruQ5PpFB pic.twitter.com/d3ZLUGMKSF
— ASIC Media (@asicmedia) August 13, 2024
The blockchain project was announced by ASX in 2017, with the expectation of being deployed in the first quarter of 2020. At that time, ASX had the ambition to replace CHESS, a computer system that manages the settlement of share transactions and records share ownership, which was first launched in the mid-1990s.
By November 2022 - after five years of pursuit, numerous delays and a cost of A$250 million - ASX decided to cancel the project after Accenture discovered several major flaws in the system's design.
ASIC alleges that, despite the difficulties, on 10 February 2022, ASX maintained that the project was “progressing well” and “expected to launch in April 2023”. This information is completely untrue.
ASIC Chairman JOE Longo said the ASX’s inaccurate statements had undermined confidence in the integrity of the market. He said it was a collective failure by the ASX Board and senior management at the time. Longo also highlighted the importance of the project, and the need for ASX to provide accurate information to the Australian public.
Although the specific fine has not been announced, according to the Australian Financial Review (AFR), ASX could face a penalty of up to more than 500 million Australian dollars (about 330 million USD).
Ms Helen Lofthouse, ASX Chief Executive, said:
“We recognise the importance and serious nature of these legal proceedings. We have cooperated fully with ASIC’s investigation and are carefully XEM the allegations.”
Amid the row, there have also been calls for ASX Chairman Damian Roche to resign.
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