The exchange admitted its upbeat project update lacked reasonable grounds when released
The Federal Court ordered ASX Limited (ASX) to pay a $20.5 million penalty after it admitted misleading the market about its clearing system replacement.
In Australian Securities and Investments Commission v ASX Limited (No 2) [2026] FCA 862, delivered on 3 July 2026, the Federal Court found that ASX Limited (ASX) had breached ss. 12DA and 12DB(1) of the Australian Securities and Investments Commission Act 2001 (Cth). It ordered ASX to pay a penalty of $20.5 million, plus $3 million towards the regulator's legal costs.
The case concerned a statement ASX released to the market on 10 February 2022. In an announcement that its then chief executive planned to retire, ASX said that its project to replace the Clearing House Electronic Subregister System (CHESS) was “progressing well, with the fully integrated industry test environment open and operating successfully.” The court referred to this as the Progressing Well Representation.
CHESS had operated as Australia's main clearing and settlement system since about 1994, processing share transactions and recording changes in ownership. ASX had spent several years developing a replacement built on distributed ledger technology, a category of technology that includes blockchain. Under a plan ASX published in October 2020, the new system was scheduled to launch in April 2023.
ASX admitted that, when it made the statement, its opinion that the project was progressing well was not reasonable. By 21 December 2021, the project had fallen behind the schedule needed to launch in April 2023. From that date, ASX had recorded the project internally at the highest risk level in its own reporting system. It had opened the first industry test environment with less functionality and lower performance than that set out in its published plan and planned to open the next two testing stages on the same reduced basis. That internal risk rating was not publicly known on or before 10 February 2022.
ASX admitted that the statement was misleading or deceptive, and that it constituted a false or misleading representation about the standard and performance of its services.
The matter did not go to a full trial. ASX had initially denied the allegations, but after both parties filed their evidence, it admitted the breaches in a statement of agreed facts. The Australian Securities and Investments Commission (ASIC) and the ASX then jointly proposed the penalty and costs.
The court stated that where the parties agreed on a proposed penalty, its task was to decide whether the figure was appropriate and within the range permitted by law. It accepted that $20.5 million was appropriate, considering ASX's role in the financial system, its size, and the need to deter similar conduct.
ASIC did not allege that the conduct was deliberate. ASX paused the project in November 2022, and the first stage of the replacement system went live on 20 April 2026.
