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ASIC launches investigation into ASX over CHESS replacement

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By Reporter
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3 minute read

The regulator is investigating suspected contraventions of the ASIC and Corporations Acts.

The Australian Securities and Investments Commission (ASIC) has commenced an investigation into suspected contraventions of the ASIC Act 2001 and the Corporations Act 2001 in relation to ASX’s CHESS replacement program.

The regulator will be investigating whether ASX, ASX Clear, ASX Settlement and/or their directors and officers have breached obligations in the oversight of the CHESS replacement and in statements and disclosures made by or on behalf of ASX as to the status of the program.

These specific obligations are set out under sections 180, 674, 674A, 1041H and 1308 of the Corporations Act 2001 and sections 12DA and 12DB of the ASIC Act 2001, and ASIC’s investigation relates to the period between 28 October 2020 to 28 March 2022.

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ASX confirmed the move in a statement to the market on Wednesday morning, which follows earlier action by both the corporate regulator and the Reserve Bank (RBA) over the program.

“ASX takes its obligations very seriously and will cooperate fully with ASIC,” the market operator said in its statement.

ASIC and the RBA laid out their expectations of ASX in a joint letter of regulator expectations last November, in which they instructed the market operator to improve its program delivery capabilities and bring the CHESS replacement back on track.

Additional action was announced by ASIC and the RBA in December with the aim of ensuring that all necessary steps are taken by ASX to support and maintain current CHESS until its replacement is successfully implemented.

Last month, ASIC announced that it had taken further action to ensure that ASX adequately responds to the findings and recommendations of an external review from late last year.

The regulator said that its action was also intended to ensure that all necessary steps are undertaken by ASX to uplift identified gaps and deficiencies in relation to the group’s portfolio, program, and project management frameworks.

In February, ASX reported a statutory profit after tax of $73.6 million for the first half of the 2023 financial year, a 70.6 per cent fall on the same period a year earlier, impacted by a CHESS derecognition charge of $176.3 million disclosed last year.

ASIC launches investigation into ASX over CHESS replacement

The regulator is investigating suspected contraventions of the ASIC and Corporations Acts.

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