The Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) have issued a joint letter to ASX setting out escalated supervisory and enforcement steps after the CHESS batch settlement failure on 20 December 2024, citing deep concerns about ASX’s management of operational risk and the speed and nature of its remediation. The RBA has begun an out-of-cycle reassessment of ASX Clear Pty Limited and ASX Settlement Pty Ltd against the RBA’s Financial Stability Standards and downgraded their compliance with the “Operational Risk” standard from partly observed to not observed, a rating used where serious issues warrant immediate action. Separately, ASIC has directed ASX under section 823BB(4) of the Corporations Act 2001 to engage an ASIC-approved expert to conduct a technical review of CHESS, with remediation intended to bolster confidence in the stability and operational resilience of the current platform until CHESS is replaced. The regulators expect ASX to prioritise immediate fixes to the issues that caused and exacerbated the December 2024 incident, and flagged potential further action if not urgently addressed, including use of new financial market infrastructure powers that commenced in September 2024 and further rulemaking under the Competition in Clearing and Settlement reforms; the measures are separate from ASIC’s ongoing investigation into ASX Settlement for suspected contraventions of section 821A.
Australian Securities & Investments Commission 2025-03-31
Reserve Bank of Australia downgrades ASX Clear and ASX Settlement operational risk compliance as Australian Securities and Investments Commission orders expert review of CHESS
The Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) have issued a joint letter to ASX after the CHESS settlement failure on 20 December 2024, expressing serious concerns over ASX's operational risk management. The RBA downgraded ASX Clear Pty Limited and ASX Settlement Pty Ltd's compliance with the "Operational Risk" standard to not observed, prompting an out-of-cycle reassessment. ASIC requires ASX to engage an expert for a technical review of CHESS under section 823BB(4) of the Corporations Act 2001 to enhance platform stability. The regulators demand immediate remediation and warn of potential further actions, including new financial market infrastructure powers and rulemaking under the Competition in Clearing and Settlement reforms.