The Australian Securities and Investments Commission (ASIC) has initiated a formal inquiry into the internal operations of the ASX Group, driven by the AU$254 million collapse of its blockchain-based project intended to replace the outdated CHESS system. This inquiry comes in light of several years marked by governance failures and unsuccessful enhancements.
The probe will be conducted by a three-member expert panel, which will assess ASX’s governance structures, risk management protocols, and overall institutional capabilities. Rob Whitfield, a former Westpac executive and current director at Commonwealth Bank, will lead the investigation, supported by Christine Holman, a director at AGL and Collins Foods, and Guy Debelle, a former deputy governor of the Reserve Bank of Australia who now chairs FundsSA.
This inquiry sheds light on the lack of structural and cultural integrity within ASX—issues that have plagued the organisation and contributed to its recent mismanagement challenges. The aim is to scrutinise whether ASX can fulfil its regulatory and financial obligations and to explore the underlying issues that have led to a series of compliance failures, including incomplete software development.
The motivation for this inquiry stems from ASX’s disappointment with its 2016 endeavour to upgrade its CHESS clearing system using a distributed ledger technology. This project ultimately faced numerous setbacks, primarily due to serious design flaws and scalability issues identified in an independent audit by Accenture. By the end of 2022, ASX chose to abandon the blockchain initiative, acknowledging a pre-tax write-down of AU$254 million. The decision was framed as a pivot back to “more conventional technology,” according to project director Tim Whiteley, though specific details on future infrastructure plans remain unclear.
With the inquiry still underway, the panel expects to not only reveal the missteps that led to the project’s demise but also to outline a roadmap for reforms aimed at preventing similar failures in the future. This initiative reflects ASIC’s commitment to ensuring robust operational standards and enhanced governance within the financial sector, especially as the industry continues to navigate the complexities of technological advancements.
