ASIC Initiates Probe Into ASX Stock Exchange Over ‘Serious Failures’
In Brief
ASIC has launched a formal investigation into ASX over repeated operational failures and governance concerns, while the exchange signals support for the probe amid efforts to restore market trust.
The Australian Securities and Investments Commission (ASIC) initiated a formal investigation into the Australian Securities Exchange (ASX), the operator of the country’s main stock exchange, following what the regulator has described as a pattern of “repeated and serious failures” that it believes have eroded public trust in the financial markets.
ASIC intends to assess ASX’s governance structures and risk management frameworks in light of a series of operational disruptions. These include an unsuccessful attempt to modernize the clearing and settlement infrastructure, as well as a prolonged service outage that occurred in the lead-up to the Christmas holiday period last year.
According to ASIC, there are continuing concerns regarding ASX’s capability to ensure the stability, security, and resilience of the critical market systems it operates. The inquiry will be led by a panel comprising representatives from Australia’s consumer and banking regulatory bodies. Depending on the outcome, ASIC may consider enforcement actions, which could include recommending changes to ASX’s executive leadership or board composition.
ASIC Chair Joe Longo was quoted as saying that ASX plays an essential role in Australia’s financial ecosystem, noting that “you simply cannot buy and settle on the Australian public equities and futures markets without relying on ASX and its systems.” He further stated that the inquiry presents an opportunity for ASX to reinforce confidence among market participants.
Following news of the inquiry, ASX shares declined by 7% in afternoon trading, marking their largest single-day drop in a year. This occurred despite a largely unchanged broader market (.AXJO), and reflects escalating tension between ASX and regulatory authorities after multiple prior instances of regulatory criticism.
ASX Signals Support For Regulatory Inquiry
The decision to launch the inquiry coincides with a broader examination of Australia’s equities market, which has been contending with a persistent three-year decline in initial public offerings. During this period of industry reassessment, Blair Beaton, who held the position of head of listings at the Australian Securities Exchange (ASX), departed from the organisation last week.
In response to the regulatory action, ASX issued a statement indicating that it supports ASIC’s decision to conduct the investigation, highlighting a five-year strategic reform plan that began implementation in 2023 as part of its long-term operational improvements.
ASX Chair David Clarke acknowledged the importance of the regulator’s move, describing it as a serious development. He conveyed the company’s intention to cooperate fully with the inquiry. David Clarke also stated that the organisation recognises that certain events in recent years have contributed to diminished confidence in the ASX, and affirmed a commitment to restoring trust in its operations.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
