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Australian Securities and Investments Commission (ASIC) has released the final report of its inquiry into the Australian Securities Exchange, highlighting significant shortcomings in governance, technology management, and risk frameworks across the exchange operator.
The findings follow a nine-month investigation by an independent panel, which assessed the ASX’s operational resilience, governance structures, and risk management practices. The inquiry builds on earlier interim findings, offering deeper insights supported by case studies and extensive stakeholder engagement.
Key Findings: Governance and Risk Weaknesses
The panel identified critical deficiencies in the ASX’s approach to managing core market infrastructure, noting that:
- The resilience of key systems has been compromised in pursuit of shareholder returns
- Governance structures lack sufficient focus on critical infrastructure oversight
- Organisational culture and capability gaps are limiting transformational change
Additionally, the report found that the ASX’s compliance management and regulatory compliance processes require significant improvement to become fully embedded within business operations. The exchange was also criticised for adopting reactive approaches to incidents, rather than proactive risk mitigation strategies.
Concerns were further raised around the ASX’s market supervision responsibilities, particularly its role in enforcing compliance with operating and listing rules—an area central to maintaining regulatory frameworks and market integrity.
Regulatory Response and Reform Commitments
ASIC Chairman Joe Longo described the report as confirmation of the urgent need for structural reform.
“This inquiry reinforces the scale of transformation required for ASX to effectively fulfil its role as a steward of critical market infrastructure,” he said.
ASIC, in collaboration with the Reserve Bank of Australia, has already secured a series of commitments from ASX, including a comprehensive reform programme aimed at strengthening governance, improving compliance monitoring tools, and enhancing operational resilience.
Key Reform Measures
As part of its transformation plan, ASX has committed to:
- Resetting its strategic and technology roadmap to align with business objectives
- Strengthening governance and independence within its Clearing and Settlement (CS) boards
- Implementing a $150 million capital charge to support infrastructure resilience
- Enhancing leadership and operational accountability
The exchange has also initiated steps to improve board independence, with the restructuring of its CS facility boards and plans to appoint additional directors with specialised expertise.
Strengthening Oversight and Regulatory Monitoring
ASIC and the RBA are advancing a revised supervisory model focused on outcomes-based regulation, reinforcing regulatory monitoring and compliance audits across critical market systems.
ASIC Commissioner Simone Constant noted that early regulatory intervention during the inquiry process has already prompted measurable progress.
“We will continue to ensure that ASX delivers on its commitments and restores trust in its operations,” she said.
Technology and Infrastructure Priorities
A key area of focus remains the safe transition of the CHESS replacement system, a critical component of Australia’s financial market infrastructure. The system is scheduled to go live in April 2026, with regulators emphasising the importance of maintaining stability during implementation.
The inquiry underscores the growing importance of compliance technology, regulatory intelligence, and governance, risk, and compliance (GRC) frameworks in ensuring the resilience of financial market infrastructure.
Outlook for Market Confidence
ASIC stressed that restoring trust in the ASX will require sustained investment in leadership, governance, and technology. The regulator also reaffirmed its commitment to promoting competition in trading, clearing, and settlement services to enhance market efficiency and innovation.
The report signals a pivotal moment for the ASX, as it embarks on a comprehensive transformation to strengthen regulatory compliance frameworks, improve operational resilience, and align with global best practices in the evolving RegTech industry.
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