The Federal Court has ordered ASX Limited (ASX) to pay a $20.5 million penalty for its misleading statement about the progress of its CHESS replacement project.
The penalty decision follows ASX’s admission that its 10 February 2022 market announcement stating the CHESS replacement project was “progressing well” was misleading and exposed market participants to the risk of financial harm.
ASIC Chair Sarah Court said, ‘Today’s penalty reflects the seriousness of ASX’s misleading conduct about a project central to the stability of Australia’s financial system.
‘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,’ the Chair said.
In delivering her reasons, Justice Markovic said, ‘given its role, ASX is a gatekeeper for preserving the integrity of, and confidence in, Australia's financial system and 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.’
Her Honour 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 and 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.’
ASX was also ordered to pay $3 million toward ASIC’s costs.
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Background
On 13 August 2024, ASIC commenced civil penalty proceedings in the Federal Court against ASX alleging it made misleading statements about the CHESS replacement project in market announcements (24-177MR).
On 15 June 2026, ASX admitted that, by making the misleading statement that the CHESS replacement project was ‘progressing well’, it contravened sections 12DA and 12DB(1)(a) and (e) of the Australian Securities and Investments Commission Act 2001 (Cth). (26-119MR)
The CHESS replacement project was a critical financial infrastructure project to replace the Clearing House Electronic Subregister System (CHESS) operated by ASX, with a new system using distributed ledger technology.
ASX commenced the project in 2016-17 and planned for it to ‘go live’ in April 2023.
On 28 March 2022, about six weeks after telling the market the project was “progressing well”, ASX announced there was a strong likelihood the project would be delayed.
On 17 November 2022, ASX paused the project and derecognised approximately $245-$255 million (pre-tax) in its own project costs.
In November 2023, ASX announced a new CHESS replacement solution would be delivered in two releases, with clearing services in Release 1 and settlement and subregister services in Release 2. Release 1 went live on 20 April 2026.