ASX settles ASIC legal proceedings over previous CHESS project statements
ASX Limited has agreed to resolve ASIC’s civil proceedings related to statements made in 2022 about the previous CHESS replacement project. The settlement, subject to Federal Court approval, requires ASX to pay a penalty of $20.5 million plus a $3 million contribution to ASIC’s legal costs.
ASIC commenced proceedings in August 2024 alleging three statements made in 2022 regarding the previous CHESS project were misleading and contravened sections 12DA and 12DB of the ASIC Act. Under the agreement, ASX admits it contravened these provisions when it made the “progressing well” representation. ASIC is no longer pursuing allegations related to representations the project was “tracking to the Published Plan” and “Tracking to Go-Live in April 2023”.
Given this development, the parties will no longer be proceeding to trial. The settlement resolves legal uncertainty that has hung over ASX since the company paused the original CHESS project in November 2022 to reassess its approach.
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What is the CHESS replacement project?
CHESS (Clearing House Electronic Subregister System) is the core infrastructure underpinning Australia’s equity market settlement. As market operator, ASX is responsible for this critical system that processes billions of dollars in daily transactions across the Australian securities market.
The CHESS replacement project became necessary as the existing system, first implemented in 1994, required modernisation to meet evolving market needs. ASX paused the original blockchain-based replacement project in November 2022 after determining the previous technology approach was not viable.
The project’s significance extends beyond ASX’s operations. Market participants rely on ASX’s statements about critical infrastructure projects for decision-making, from technology investment planning to operational readiness timelines. When the company stopped the project in November 2022, it tested market confidence in ASX’s disclosures and raised questions about the accuracy of previous statements.
The settlement resolves a key regulatory overhang that has weighed on ASX’s reputation since the 2022 project pause, removing uncertainty about potential trial outcomes and penalties.
Board and management response
Chair David Clarke acknowledged the settlement reflects ASX’s recognition of its responsibilities as market operator and infrastructure steward. The Board’s decision to settle, he said, reflects a desire to focus ASX on building for the future while maintaining work required to build confidence and deliver for the market.
ASX Chair David Clarke
“As the market operator and a steward of critical market infrastructure, our words matter. I am sorry ASX fell short. We recognise the impact this has on trust and confidence, and we take responsibility for the lessons that must be learned from that experience.”
Clarke stated ASX will continue the reset across the Group, informed by the findings of the ASIC Inquiry report delivered earlier this year. The market must have confidence in what ASX says about its operations, he noted, as these statements can be relied upon to make decisions.
Clarke stated ASX will continue the reset informed by the ASIC Inquiry Final Report, which concluded a regulatory examination of ASX’s governance, capability, and risk management and imposed an additional $150 million capital charge alongside a 30 June 2026 deadline to reset the Accelerate Program with ASIC and the Reserve Bank of Australia.
CHESS project progress since the reset
ASX has made operational progress on the reset CHESS project since abandoning the original blockchain-based approach. Key achievements include:
- Successfully delivered Release 1 two months ago, providing clearing services on a modern, cloud-aligned platform
- CHESS consistently processing elevated trading volumes during periods of heightened global market volatility
- Demonstrated resilience and scalability under real market conditions
- Ongoing technology modernisation investment remains a core Group focus
Interim CEO Darren Yip emphasised CHESS remains a critical priority for ASX, with the successful Release 1 delivery marking a significant milestone in the reset project.
Interim CEO Darren Yip
“Since go-live of Release 1, CHESS has continued to perform strongly, consistently processing elevated trading volumes during periods of heightened global market volatility – underscoring its resilience and scalability.”
The operational performance demonstrates ASX is executing on its revised approach, with Release 1 already live and performing under real market conditions.
Financial impact and timing
| Item | Amount | Timing |
|---|---|---|
| Penalty | $20.5 million | Provisioned FY26 |
| Legal costs contribution | $3 million | Provisioned FY26 |
| CHESS Partnership Programme | Up to $70 million | Ongoing since Feb 2023 |
The $20.5 million penalty will be provisioned in FY26 and recognised as a non-recurring significant item. The $3 million legal costs contribution will also be recognised as a significant item in FY26. The proposed penalty requires an approval hearing in the Federal Court of Australia that has not yet been scheduled but may occur in late FY26 or FY27.
ASX established the CHESS Partnership Programme on 16 February 2023, recognising the extended timeline of the project. The programme provides up to $70 million in distributions as financial support to key participants contributing to the successful progress and completion of the new CHESS project.
The settlement provides cost certainty for investors, with the combined $23.5 million now provisioned. The CHESS Partnership Programme commitment signals ASX’s recognition that stakeholder collaboration is essential to project success.
What comes next for ASX
The settlement closes one chapter but leaves several items on ASX’s forward agenda:
- Federal Court approval hearing for the penalty (expected late FY26 or FY27)
- Continued CHESS project delivery beyond Release 1
- Ongoing implementation of ASIC Inquiry recommendations
The CHESS project is now on firmer footing, according to Chair Clarke, with Release 1 already operational. Technology modernisation and restoring market confidence remain central to ASX’s strategic priorities as the company continues its organisational reset informed by the ASIC Inquiry findings.
With the legal proceedings resolved, ASX can direct full management attention to operational execution and rebuilding stakeholder trust, removing a distraction that has lingered since 2022.
The organisational reset extends to leadership, with ASX appointing Anthony Attia as incoming CEO effective 1 September 2026, a Euronext veteran whose selection was explicitly tied to his track record in technology-enabled transformation at major exchange groups.
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