The statements were in relation to ASX's CHESS replacement project
The Australian Securities and Investments Commission (ASIC) has taken ASX Limited to Federal Court over claims that ASX made misleading statements about its Clearing House Electronic Subregister System (CHESS) replacement project.
ASX announcements on 10 February 2022 indicated that the project was “on-track for go-live” in April 2023 and “progressing well”. According to ASIC, these statements suggested that the project was adhering to ASX’s publicised project timeline and was going to be able to meet milestones like the April 2023 go-live date; however, at the time these announcements were made, the project was not proceeding as planned and ASX did not have a reasonable basis to suggest that those deadlines would be met as stated.
“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”, ASIC Chair Joe Longo said. “Companies and market participants rely on what the ASX says about its operations to make their own decisions and investments. We expect the ASX to be a place to list and invest with confidence. When the ASX falls short, it has wide-ranging consequences across the market”.
He pointed out that the CHESS replacement project was a fundamentally significant technology project that involved the replacement of critical national infrastructure essential 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”, Longo said. “We allege that the true state of affairs as at 10 February 2022 was that the project was not ‘progressing well,’ contrary to ASX’s announcement. The delay and subsequent pause of the project in November 2022 caused significant costs to ASX and market participants who relied on assurances as to the progress of the project and scheduled go-live date”.
He added that effective and transparent management of the CHESS replacement project was necessary because “failure to do so can lead to a lack of confidence in Australia as a market to attract investment”.
In March, ASX forked out $1,050,000 in penalties after an investigation was conducted to determine its compliance with market integrity rules. ASIC confirmed that it had not yet decided on the penalty it was seeking for the current case.
