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ASX Limited (ASX: ASX) was given a lashing by a Federal Court justice as she formally ordered the Australian share market operator to pay a $20.5 million penalty after being found to have misled the market in 2022 over the progress of its troubled CHESS replacement project.
The penalty issued today settles civil proceedings brought by the Australian Securities and Investments Commission (ASIC) in 2024, with ASX also agreeing to pay $3 million toward ASIC's legal costs.
ASX agreed in June to the $20.5 million penalty following an admission to just one of three allegations brought by ASIC.
The case centred on a market announcement made by ASX on 10 February 2022, in which the exchange operator said its multiyear project to replace the CHESS clearing and settlement system was "progressing well", a statement that ASIC alleged was misleading and deceptive.
Six weeks after the announcement, on 28 March 2022, ASX disclosed the project was likely to be delayed and by November 2022 the exchange had paused the CHESS replacement project entirely, ultimately writing off $245 million to $255 million in project costs on a pre-tax basis.
ASIC originally brought three allegations against ASX but dropped two of them, namely representations that the project was "tracking to the published plan" and "tracking to go-live in April 2023".
"Today’s penalty reflects the seriousness of ASX’s misleading conduct about a project central to the stability of Australia’s financial system," says ASIC chair Sarah Court.
"Listed entities must be accurate and transparent when updating the market on significant projects, particularly where delays and risks have the potential to affect confidence, investment and decision-making across the market.
"For market operators, that responsibility is even greater, given their role in maintaining critical market infrastructure and ensuring confidence in Australia’s financial system."
In delivering her reasons, Justice Markovic said that given ASX's role as a "gatekeeper for preserving the integrity of, and confidence in, Australia's financial system" the market operator "should have been setting a benchmark for accuracy and transparency in its own market disclosures".
"As the operator of critical market infrastructure, [ASX] is expected to adhere to high standards. In light of the contraventions, it fell short of those standards," said Justice Markovic.
She said it was "also necessary that the market as a whole understands that misleading announcements made by disclosing entities about their operations will be the subject of significant penalties".
"There is a need to deter other listed entities from making misleading announcements about the progress of significant projects in which they may be engaging, including where the completion of that project involves third parties." said Justice Markovic.
Despite the penalty being officially ordered today, ASX has previously indicated that it will be recorded as a significant item in its FY26 accounts,
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