ASX has filed a concise statement in response to the proceedings brought by Australian Securities and Investments Commission (ASIC) in the Federal Court on 13 August 2024.
At the time, the regulator alleged that by making certain statements to the market on 10 February 2022 in relation to the previous CHESS replacement project, ASX contravened sections of the ASIC Act 2001 relating to misleading or deceptive conduct, and false or misleading representations.
However, based on the work being carried out by ASX and the information available at the time regarding the status of the project, ASX has said it denies that the statements made on 10 February 2022 contravened the law.
In a statement on Friday, it pointed to the CHESS replacement project’s “highly complex, technical and dynamic” nature, on which the exchange “regularly communicated” progress.
“ASX accepts that the delays with the previous CHESS replacement project caused disruption, something for which we’ve apologised. However, there was a reasonable basis for the statements ASX made about the project’s progress on 10 February 2022 and we do not accept the allegations that we breached the law,” managing director and chief executive Helen Lofthouse said.
“ASX provided regular updates on the project, including that it was subject to feedback and change, as well as the input of our external suppliers. When we became aware that the project required a deeper reassessment, we commissioned an independent review.
“We took the difficult decision to pause and reassess the project and we have conducted several independent reviews, including those requested by our regulators, and we continue to implement recommendations from these reviews.”
According to Lofthouse, ASX has, additionally, taken a “different” approach to how it is implementing this upgrade to ASX’s equity clearing and settlement systems, including selection of a product-based solution and staging the implementation over two releases.
“ASX has also established the CHESS Replacement Partnership Program to support continued industry participation in this critical project,” she said.
“Our ongoing regulatory engagement with ASIC remains open and constructive. However, it is in the interests of the company and its shareholders that ASX defends the proceedings.”
On 14 August, ASIC alleged that statements made in ASX announcements on 10 February 2022 that the project remained “on-track for go-live” in April 2023 and was “progressing well” were misleading.
According to the regulator, these statements implied the project was tracking to ASX’s announced project plan and was on track to meet future milestones, including “go-live” in April 2023.
ASIC alleges those representations were misleading and deceptive because, at the time of the announcements, the project was not tracking to plan. Moreover, the regulator alleged that the ASX did not have any reasonable basis to imply the project was on track to meet future milestones.
