The Australian Securities and Investment Commission (ASIC) has sued the Australian Securities Exchange (ASX) for improper disclosure. What’s the scam?
The scam is that the ASX should set the gold standard for good corporate citizenship, but according to the ASIC suit, they do not.
The ASX is Australia’s primary portal for the trading of securities – shares, options, bonds and other publicly tradeable financial instruments. It is one of only three companies to have a license to do so, and by far the largest. It is itself a publicly listed company, and that’s where it gets – ahem – complicated.
Timely and accurate disclosure of important events is paramount to a well-functioning financial market. ASIC alleges that ASX failed to inform the market of the lack of progress of a major IT project in February 2022, when it announced that the project remained “on-track for go-live” in April 2023 and was “progressing well.” Except it wasn’t going well at all.
The offending project was the replacement of the existing Clearing House Electronic Subregister System (CHESS), which was originally slated to go live in 2020 but finally abandoned in December 2022, resulting in a $255m write-off.
According to ASIC Chair Joe Longo, “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.
Ouch!
Long continued, “[CHESS] 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.”
As regular visitors to the anachronistic, clunky bulletin board that serves as the ASX ‘website,’ we wonder if there will ever be a CHESS replacement at all …
Strange thing is that ASIC is subject to constant criticism for not suing suing enough. Now they come out and have a crack at fellow markets supervisor ASX. Must be some interesting politics behind the scenes.
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