ASX hit for transparency failures
ASIC has hit the ASX with a $1.05 million fine over thousands of rules breaches.
The Australian Securities Exchange (ASX) has been fined $1.05 million after an investigation by the Australian Securities and Investments Commission (ASIC) revealed the market operator breached rules on 8,417 occasions.
Joe Longo, ASIC's chairman, says the penalty is meant as a clear indicator to the ASX's board of the high standards expected by the regulator, especially as it continues efforts to overhaul its post-trading systems.
The infractions were linked to what ASIC labelled as an “order information transparency failure” - a misconfiguration of ASX's internal trading systems.
This misstep was considered severe enough to warrant the first ever infringement notice issued to a market operator in Australia.
The breaches, occurring between April 2019 and December 2022, primarily revolved around the failure to provide pre-trade transparency for certain orders, an error resulting from the incorrect setting of the minimum value for block trades at $0 instead of the required $200,000.
This issue is the latest in a series of challenges for ASX, including delays and the eventual cancellation of its CHESS replacement project.
In November, ASX announced a partnership with Tata Consulting Services to undertake the rebuild, signalling a commitment to rectify its technological and governance woes.
Governance has come under scrutiny, with Damian Roche, ASX chairman, facing questions over the organisation's ability to manage such significant technological upgrades effectively.
The oversight comes at a time when ASX is also navigating legislative changes aimed at introducing more competition into clearing and settlement functions.
These reforms, coupled with ASIC's continued focus on operational resilience, are part of a period of intense scrutiny and potential transformation for ASX and its practices.
ASX has expressed disappointment over the error and reaffirmed its commitment to maintaining high standards of market transparency.
Meanwhile, ASIC's investigation into the failed CHESS replacement project continues, with the regulator also examining the broader implications of the recent legislative reforms on market competition and resilience.