ASIC Launches Probe into ASX Governance After Blockchain Failure

Australia’s Securities and Investment Commission (ASIC) has initiated an investigation into the Australian Securities Exchange (ASX) to assess its governance, technical capabilities, and risk management protocols. This move comes in response to ongoing concerns about the exchange's ability to maintain stable and secure market infrastructure. The inquiry was formally launched on June 16, following expressions of worry from both ASIC and the Reserve Bank of Australia.

The decision to probe ASX was further motivated by the collapse of its blockchain-based upgrade to the CHESS settlement engine in 2022. This failure led to a significant and costly reset, drawing criticism from political circles. ASIC subsequently took legal action against ASX for allegedly making misleading statements regarding the project.

To lead this investigation, ASIC has assembled a panel of three highly experienced finance professionals. The panel is chaired by Rob Whitfield, a former chief risk officer at Westpac and current director at Commonwealth Bank. Joining Whitfield are Christine Holman, who serves on the boards of utility company AGL and restaurant operator Collins Foods, and Guy Debelle, the former deputy governor of the Reserve Bank of Australia.

The panel's mandate includes a comprehensive review of ASX’s governance structures, technical capabilities, and risk management frameworks. Their findings will be used to recommend improvements and address any identified weaknesses. The scope of the inquiry covers the entire ASX group, which processes over A$6 billion in trades daily.

This investigation underscores the regulatory scrutiny faced by major financial institutions, particularly in the wake of high-profile failures. The involvement of such esteemed figures in the inquiry panel highlights the seriousness with which ASIC is approaching this matter. The recommendations from the panel are expected to provide a roadmap for enhancing the robustness and reliability of ASX’s market infrastructure, ensuring it can continue to operate effectively and securely in the future.