The Australian Securities Exchange (ASX) has agreed to pay a total of $23.5 million in a settlement with the corporate regulator after admitting it misled the market about the progress of its CHESS technology upgrade project. The agreement was announced on Monday, shortly before court proceedings were set to begin in the Federal Court.

Under the terms of the settlement, ASX will pay a $20.5 million fine along with $3 million to cover the Australian Securities and Investments Commission’s (ASIC) legal costs. ASIC initiated legal action in 2024, alleging that a statement made by ASX in February 2022 about the CHESS replacement project was misleading. The regulator contended that the exchange implied the project was on track to meet key milestones, including a planned "go-live" date in April 2023, despite internal evidence indicating otherwise.

ASX admitted that as early as December 2021 the project was not on schedule to meet its critical milestone, with the initiative internally classified as "red" due to significant unresolved issues and risks. Timelines for outstanding work had also been extended, but none of these developments were disclosed in the February 2022 public announcement. Approximately six weeks after that update, ASX informed the market of a probable delay to the go-live date and subsequently paused the project, writing down pre-tax project costs estimated between $245 million and $255 million.

The legal action and settlement followed a broader regulator-led investigation into ASX's operational risks, prompted by a series of technology failures and trading outages, including issues related to the CHESS project. ASIC’s review found deficiencies in the exchange’s risk culture and governance, as well as apparent prioritization of shareholder returns over compliance and market integrity.

ASIC chair David Clarke emphasized the importance of market confidence in ASX’s communications, noting that the misstatements had undermined trust in statements made by an operator responsible for critical market infrastructure. Clarke acknowledged the impact of the case on confidence and stated the organization accepts responsibility for lessons arising from the experience.

ASIC chair Sarah Court highlighted that ASX’s misleading disclosure risked damaging confidence in Australia’s financial markets and stressed the critical role of accurate and timely information from entities managing core market systems.

Following the settlement, the Federal Court has adjourned the proceedings until July 1 pending approval of the terms. The settlement comes nearly two weeks after the departure of former ASX CEO Helen Lofthouse. Anthony Attia, a European financial markets executive, will take over as ASX chief executive officer in September.