ASX Faces Lawsuit from ASIC Over Alleged Misleading Statements

The Australian Securities and Investments Commission (ASIC) has commenced proceedings in the Federal Court against Australia's largest market operator, ASX Limited, alleging that the company made misleading statements in relation to its Clearing House Electronic Subregister System (CHESS) replacement project. ASX's February 10, 2022 announcement that the project remained “on-track for go-live” in April 2023 and was “progressing well” is claimed by ASIC to be misleading.

ASIC Chair Joe Longo said: “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” 

“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 cost to ASX and market participants who relied on assurances as to the progress of the project and scheduled go-live date”

“The CHESS replacement project must be managed effectively and transparently. Failure to do so can lead to a lack of confidence in Australia as a market to attract investment.”

ASIC is yet to determine the penalty it will seek for ASX's alleged contraventions.

On March 7, 2024, ASIC announced that ASX had paid a $1.05 million fine following an investigation into its compliance with the market integrity rules.