June 15 (Reuters) - Australia's ASX admitted to making misleading statements regarding the progress of a troubled software upgrade on Monday, while agreeing to pay a penalty of A$20.5 million ($14.50 million), subject to the Federal Court's approval.
The Australian Securities & Investments Commission (ASIC), the country's corporate regulator, sued ASX in August 2024, alleging that statements made in 2022 about the previous Clearing House Electronic Subregister System (CHESS) project, which was scheduled for launch in 2023, misled the public.
By late 2021, ASX itself had recorded the project status as "red", meaning there were material risks to the delivery time. ASX's audit and risk committee was told of the project's "red" status a week before the February 2022 trading update, the ASIC lawsuit said at the time.
In a February 10, 2022 announcement informing the market of then-CEO Dominic Stevens' plan to retire, the exchange said the replacement project was "progressing well".
"The fine closes a legal chapter, but the reputational discount and deeper structural questions will persist until ASX faces real competitive pressure or demonstrates genuine cultural reform through delivery," said Kai Chen, Director at MPC Markets.
ASX shelved the previous CHESS project in November 2022, following repeated failures and heavy spending to reassess it.
The first release of the revised CHESS clearing system went live in April and is projected to be completed by 2029.
Shares closed up 2.6% at A$50.46, outperforming the broader benchmark's 1.3% gain.
ASX said it will also pay A$3 million towards ASIC's costs in addition to the penalty, which is subject to Federal Court Approval.
The proposed penalty will be provisioned in fiscal 2026 and recognised as a non-recurring significant item, while the contribution to ASIC's legal costs will also be recognised as a significant item in fiscal 2026, the exchange added.
($1 = 1.4136 Australian dollars)
(Reporting by Nichiket Sunil in Bengaluru; Editing by Chizu Nomiyama and Rashmi Aich)
