Australia’s corporate regulator said on Wednesday it is suing the country’s stock exchange operator ASX Ltd for making “misleading” statements about the timetable for replacing its Clearing House Electronic Subregister System (CHESS) trading platform.
The Australian Securities and Investments Commission (ASIC) has alleged that ASX statements claiming that the CHESS platform replacement remained “on track to commence” in April 2023 and was “progressing well” were misleading and deceptive.
ASIC claimed the project was not progressing as planned when the data was released in early February 2022 and ASX had no “reasonable basis” to suggest the project would meet schedule.
“We believe this was a collective failure on the part of the ASX board and senior executives at the time,” ASIC chairman Joe Longo said in a statement.
In late 2022, the ASX halted the rebuild of its legacy software using blockchain-based technology, citing poor governance, concerns about the product’s complexity and scalability, and difficulty finding experts to support it.
The cancellation of the project has since led to a loss of A$176.3 million (US$117.01 million), an investigation by the Australian Securities and Investments Commission, and raised questions about the integrity of the exchange, which hosts companies worth a combined A$2.50 trillion.
“We recognise the importance and seriousness of these measures,” ASX chief executive Helen Loftus said in a filing to the exchange on Wednesday.
“We have fully cooperated with ASIC’s investigation and are now carefully reviewing and considering the allegations.”
Regulator ASIC said it had not yet determined what penalty it would seek for the ASX’s alleged breaches.
(1 USD = 1.5072 AUD)