ASX hit with unprecedented $150m charge over failures as ASIC demands change

The corporate regulator has hit the Australian Securities Exchange with an unprecedented $150 million capital charge as part of a “circuit-breaker” package of demands aimed at addressing a string of repeated and serious failures at the ASX.

The demands, which have been accepted by the ASX, follow a scathing inquiry commissioned by the Australian Securities and the Investments Commission that found the share market operator had put profits ahead of its responsibilities.

The inquiry’s report, released publicly on Monday, amounts to an extraordinary vote of no-confidence in the ASX and casts doubt over the future of the ASX-listed company’s chief executive, Helen Lofthouse.

“ASX needs to embrace a new era of accountability, investment, and stewardship to increase confidence, and meet the expectations of the market and the Australian public,” ASIC chair Joe Longo said.

‘This package is a circuit-breaker,” he said.

‘Many of the problems the report identifies took years to develop, and while there are some immediate actions that will be put in place, the key issues are going to take time and resources to resolve.

“There are no quick fixes or shortcuts.”

ASX shares were nearly 7 per cent lower as at at 10.20am.

ASIC commissioned the inquiry by an expert panel in June in response to growing concerns about the ASX’s ability to manage and develop critical market infrastructure in in the wake of a string of problems, notably a trading outage in December 2024.

The inquiry’s report found “serious shortcomings across ASX’s frameworks and practices in relation to governance, capability and risk management, as well as deficiencies in culture and leadership”.

It said the ASX had under-invested in its technological systems - prioritising financial performance over required capital expenditure - applied to band-aid solutions to problems demanding long-term fixes, lacked “aspiration” and didn’t have the corporate governance needed for a company running a critical market platform.

“This incremental approach,together with an insular and defensive culture, has brought about a narrow focus based on trying to meet minimum standards rather than striving to fulfill the role that best serves Australia’s interests,” the report said.

The ASX has committed to the inquiry’s recommendations, including stronger leadership, strengthening the independence of the boards overseeing market clearing and settlement functions, and setting clear milestones and accountability for its multi-year internal overhaul.

The capital charge - the first imposed by ASIC - will see the ASX put aside $150m by June 2027 to reflect the ASX’s “elevated risk profile”. The cash will be ringfenced until the milestones in the cultural and risk revamp are met.

Ms Lofthouse said the report made for “tough “ reading.

“It has placed ASX under a critical lens and the assessment from the panel is that we must get better,” she said.

“We’re driving that process now and it is clear we will need to lift leadership at all levels to deliver.”