ASX ordered to pay $20.5 million penalty over CHESS replacement disclosure

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ASX penalty over CHESS disclosure

Highlights

The Federal Court ordered ASX Limited to pay a $20.5 million penalty for a misleading 10 February 2022 announcement claiming the CHESS replacement project was progressing well.
ASX admitted its statement exposed market participants to the risk of financial harm and failed to meet required standards of accuracy and transparency.
Justice Markovic emphasized the penalty serves as a deterrent, signaling that misleading disclosures about significant projects will attract substantial penalties for all listed entities.

Court ruling on CHESS disclosure

As reported by ASIC, the Federal Court orders ASX Limited to pay a $20.5 million penalty for a misleading statement in its 10 February 2022 market announcement about the progress of its CHESS replacement project. ASX admits that describing the project as "progressing well" was misleading and exposed market participants to the risk of financial harm.

ASIC Chair Sarah Court says the penalty reflects the seriousness of misleading conduct concerning a project central to the stability of Australia's financial system. She says listed entities must be accurate and transparent when updating the market on significant projects, particularly when delays and risks can affect confidence, investment and decision-making across the market.

Broader implications for market transparency

Justice Markovic says ASX, given its role, is a gatekeeper for preserving the integrity of and confidence in Australia's financial system and should have been setting a benchmark for accuracy and transparency in its own disclosures. She says that, as the operator of critical market infrastructure, ASX is expected to adhere to high standards and fell short of those standards in light of the contraventions.

The judge also says the wider market must understand that misleading announcements by disclosing entities about their operations will attract significant penalties. She adds that deterrence is needed to discourage other listed entities from making misleading statements about the progress of significant projects, including where delivery depends on third parties.

Our earlier article on the FCA’s disclosure overhaul and fee ban outlined how UK regulators are tightening conduct standards to make investment information clearer and charging practices fairer. We noted the push for plain-English pre-sale documents, a crackdown on “double-dipping” fees on clients’ cash balances, and stronger expectations for firms to demonstrate better value for customers.

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