Regulators flag serious compliance issues at Australian Exchange

[SYDNEY] Australia’s markets regulator and the central bank identified serious issues at exchange operator ASX related to trade settlement that they said need immediate action to resolve.

The regulators highlighted concern about the speed and nature of ASX’s remediation actions following an incident in December, according to a joint statement on Monday (Mar 31) from the Reserve Bank and the Australian Securities and Investments Commission (Asic). 

Asic directed ASX to engage an expert to undertake a technical review of its Clearing House Electronic Subregister System, known as Chess. Settlement delays in December added to already heightened worries about the technology behind settlement at the country’s main exchange. 

“It is deeply disappointing that the regulators need to take these actions today,” said Reserve Bank of Australia (RBA) governor Michele Bullock. “But they are necessary.”

RBA lowered its assessment of ASX Clear and ASX Settlement compliance, the statement said. A spokesperson for ASX didn’t reply to a request for comment.

“ASX operates critical infrastructure that plays a central role in the financial system,” Bullock said. “ASX’s management of operational risk has been a concern for RBA staff and the payments system board for some time, and the recent Chess incident has underscored those concerns.”

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The underlying issues raised need to be addressed as a matter of priority to strengthen the resilience of the Chess system, she added. BLOOMBERG