Reserve Bank of Australia Cites ASX Governance Failures

The Reserve Bank of Australia announced on September 23 that the Australian Securities Exchange's clearing and settlement facilities fail to meet central bank expectations in several critical areas. The assessment highlighted deficiencies in governance, credit risk, and operational risk, noting that some facilities only partly observed requirements. Regulators expressed specific concern over whether governance arrangements prioritize the interests of clearing and settlement facilities.

This regulatory pressure follows a June inquiry by the Australian Securities and Investments Commission, which identified longstanding shortcomings in the culture and capability of the exchange. These issues persist after the 2022 abandonment of the ASX's blockchain-based CHESS replacement project.

While the central bank acknowledged that the ASX established a Transformation Portfolio to address these deficiencies, the Reserve Bank of Australia will maintain heightened supervisory scrutiny. Future oversight will focus specifically on governance independence and cyber resilience.