ASX Fined US$20.5m Over Misleading CHESS Update

Federal Court Imposes US$20.5 Million Penalty After Finding ASX Misled the Market

The Federal Court of Australia delivered its ruling between 1 July 2026 and 3 July 2026, the judgment window, in the case brought by theASICagainst theASX. The Court ordered ASX to pay a US$20.5 million penalty because the company had issued misleading market announcements about the progress of theCHESSreplacement project. The Court also ordered ASX to pay US$3 million towards ASIC’s litigation costs.

ASX had previously admitted that its market announcement issued on 10 February 2022 was misleading. The announcement stated that the CHESS replacement project was “on track”, and the Court found that this statement exposed market participants to the risk of financial loss.

(Source: ASIC, 26-119MR, published: 15 June 2026; The Register, reporting on the Federal Court judgment delivered on 3 July 2026.)

Basis for Finding the Statement Misleading

The Actual Status of the Project When the Announcement Was Issued

The facts established by the Court included:

• As at 21 December 2021, the CHESS replacement project had deviated from the critical path for its planned go-live date in April 2023 and required replanning.

• From that point until the announcement was issued on 10 February 2022, the project was rated “red” internally at ASX, indicating significant unresolved issues and risks.

• Although the industry test environment had been opened or was planned to be opened, its functional scope and performance had been reduced, and the schedule for unfinished work had also been delayed.

Despite this, ASX still told the market in its announcement on 10 February 2022 that the project was “on track”. ASX has now admitted that this statement was misleading and breached section 12DA and sections 12DB(1)(a) and (e) of the Australian Securities and Investments Commission Act 2001 (Cth).

Statements From the Parties

“Today’s penalty reflects the seriousness of ASX’s misleading conduct in relation to a project that was critical to the stability of Australia’s financial system. Listed companies must be accurate and transparent when informing the market about major projects, particularly where delays and risks may affect confidence, investment and decision-making across the entire market.”

The ASIC chair further stated that, for market operators, this disclosure responsibility is even greater given their role in maintaining critical market infrastructure and ensuring confidence in the Australian financial system.

In giving reasons for judgment, Justice Markovic stated that, given ASX’s role, it is a gatekeeper for maintaining the integrity of, and confidence in, Australia’s financial system, and should set the benchmark for accuracy and transparency in its own market disclosures. The judge noted that, as the operator of critical market infrastructure, ASX should comply with high standards, but that, given its contravening conduct, ASX had failed to meet those standards. The judge also stated that the market as a whole must understand that misleading announcements made by disclosing entities about their operations will attract serious penalties. This is also intended to deter other listed entities from making misleading announcements about the progress of major projects in which they may be involved, including where completion of the project involves third parties.

(Source: Federal Court of Australia, judgment 2026FCA0862; Markets Media, 2026 report.)

Timeline of the CHESS Replacement Project

The CHESS replacement project is a critical financial infrastructure initiative intended to replace theCHESSoperated by ASX with a new system using distributed ledger technology. The project was launched between 2016 and 2017 and was originally scheduled to go live in April 2023. The following timeline summarises the main developments from the project’s launch to this penalty:

Reasons for the Project’s Failure

A previous parliamentary report analysed the reasons why the project ran into difficulties, mainly summarising them as follows:

1. The project objectives were not clearly defined, resulting in repeated changes in direction.

2. Requirements continued to expand while construction work had already begun, causing the planning and deployment phases to overlap.

3. Scalability risks were not properly identified and managed, leaving persistent doubts over whether the chosen blockchain technology could support the exchange’s core system.

(Source: relevant Australian parliamentary inquiry report, public documents.)

Next Steps and Responses From the Parties

The new system is currently being advanced in two phases based on the Tata Consultancy Services technology platform: Version 1, which is responsible for clearing services, went live on 20 April 2026; Version 2, which is responsible for settlement and subregister services, is targeted to complete major technical build and enter use before 2029.

ASX chair David Clarke issued an apology after the penalty, stating that , and said the company recognised the impact that pausing the project in November 2022 had on market confidence and would learn from it.

ASIC stated that it had since obtained a series of undertakings from ASX to strengthen the oversight, governance and delivery mechanisms of the CHESS replacement project. These measures are intended to support market confidence in the operation and future development of Australia’s critical financial infrastructure. ASIC has also listed financial reporting and disclosure-related misconduct as one of its enforcement priority areas for 2026.

(Sources: ASX official statement; The Nightly, July 2026 report.)

Questions Related to the CHESS Replacement Project