ASX (ASX:ASX) filed its defence today in relation to proceedings initiated by the Australian Securities and Investments Commission (ASIC).
In mid-August, ASIC claimed in an application to the Federal Court that ASX had misled investors. ASIC alleged that, in February 2022, ASX incorrectly stated that the planned blockchain-based upgrade to the company’s Clearing House Electronic Subregister System (CHESS) was “on track for go-live” in April 2023 and “progressing well”. ASIC claims these statements misrepresented the project’s actual status, alleging ASX lacked a reasonable basis to imply it would meet the stated milestones.
ASIC Chair Joe Longo said ASX’s statements “go to the heart of trust in the integrity of our markets”, underscoring the importance of transparency, especially in projects critical to the national financial infrastructure. Longo emphasised the impact of ASX’s assertions on market participants who rely on ASX’s guidance to make investment decisions, and noted financial and operational repercussions following the project’s delay and eventual halt.
In today’s announcement, ASX CEO Helen Lofthouse stated that, while ASX accepts the disruption caused by the CHESS delays, the company had “a reasonable basis” for its 2022 statements, given the information available at the time. She added that ASX has since taken steps to reassess the project, commissioning independent reviews and establishing a CHESS Replacement Partnership Program to guide the project’s future implementation.
CHESS is a system for recording and settling share transactions. It has been in use since 1994, but is outdated and needs replacing. ASX decided to replace CHESS in early 2016, engaging a company called Digital Asset in 2017 to build a new blockchain-based system. However, after delays and noted defects, the project was paused in November 2022 and later abandoned. About $250m had been invested.
Shares in ASX are trading 1.17% higher at $66.55.