Lawsuit Against ASX Limited

Australia’s securities watchdog has sued ASX Limited, the nation’s largest market operator, for “allegedly making misleading statements” about a blockchain project intended to replace the old system managing shareholdings and settlement.

In a statement released today, the Australian Securities and Investments Commission (ASIC) alleged that certain announcements made by ASX in February 2022 regarding the blockchain project contained misleading information. They specifically pointed to claims that the project was “on track for go-live” in April 2023 and was “progressing well.”

“ASIC alleges those representations were misleading and deceptive because, at the time of the announcements, the project was not tracking to plan, and ASX did not have any reasonable basis to imply the project was on track to meet future milestones,” the regulator stated.

The planned project aimed to replace the Clearing House Electronic Subregister System (CHESS). However, ASX paused it in November 2022 after a review by Accenture, which identified “significant challenges.” This led ASX to pause the project and write down costs of A$250 million ($166 million).

“When the ASX falls short, it has wide-ranging consequences across the market,” said ASIC Chair Joe Longo. “Companies and market participants rely on what the ASX says about its operations to make their decisions and investments.”

In response, ASX stated that ASIC is seeking declarations, financial penalties, an adverse publicity order, and costs against the company.

“We recognize the significance and serious nature of these proceedings. We cooperated fully with ASIC’s investigation and are now carefully reviewing and considering the allegations,” said Helen Lofthouse, managing director and CEO of ASX.

ASX’s stock price closed down 3.67% at A$63.45 on Wednesday, with a market cap of A$12.3 billion.

ASX is expected to release its financial results for the entire year ending June 30, 2024, on Friday.