Summary: Australia’s corporate regulator has released a final inquiry report that identifies governance deficiencies and risk management failures at ASX, the country’s market operator. The inquiry’s conclusions mirror earlier interim findings and recommend substantial organisational change to restore confidence in the stewardship of critical market infrastructure.
April 2 - The independent panel commissioned by the corporate regulator concluded that ASX compromised the resilience of critical market infrastructure in pursuit of high shareholder returns. That assessment is set out in a final report that followed a comprehensive review process carried out by the inquiry panel.
The panel said it conducted more than 140 interviews with stakeholders, considered submitted materials, examined an expert technical report into the CHESS settlement system and reviewed in excess of 10,000 documents, according to the regulator.
Key findings reiterated those in the interim report: governance arrangements at the exchange did not "provide the necessary focus on critical market infrastructure," and the panel judged that ASX "lacks the aspiration to be a steward of critical market infrastructure."
"The further evidence and key observations in this Final Report support the scale of transformational change required at ASX to deliver on its stewardship of critical market infrastructure," ASIC Chair Joe Longo said.
"This report confirms that ASIC’s decision to commission this unprecedented Inquiry was the right call."
In additional observations, the panel said ASX’s risk management and compliance practices need to mature and become more deeply embedded within business processes. The report found that the absence of mature, embedded practices had left the exchange being overly reactive and tactical when responding to incidents and known gaps.
Separately, the regulator noted that it had already taken regulatory action in December by imposing an additional capital charge of A$150 million on ASX. That step was taken in response to the inquiry, which was originally launched in June after years of tensions relating to a failed software upgrade and repeated trade-processing glitches.
The final report’s conclusions underline the inquiry panel’s view that substantial organisational and cultural change is required within ASX to meet the demands of stewarding critical market infrastructure. The regulator characterized commissioning the inquiry as an unprecedented decision and said the final report supports the need for significant reform.
Impacted areas noted in the report include:
- Governance and oversight within the exchange operator.
- Risk management and compliance integration into operational processes.
- Resilience of critical market infrastructure, including the CHESS settlement system.