Australia’s corporate regulator has launched a formal inquiry into the Australian Securities Exchange (ASX), citing repeated and serious operational failures that it says have eroded confidence in the country’s financial markets.
The Australian Securities and Investments Commission (ASIC) announced Monday that it would investigate the ASX’s governance and risk management practices. The move follows a string of technical and managerial issues at the exchange, including a failed overhaul of its clearing and settlement system and a prolonged market outage in the lead-up to Christmas last year.
ASX shares dropped 6% on the news.
In a statement, ASIC said it held “ongoing concerns over ASX’s ability to maintain stable, secure and resilient critical market infrastructure.” The investigation will be conducted by a panel that includes representatives from Australia’s banking and consumer regulators. The commission has not ruled out further enforcement action, including directing the ASX to overhaul its board or senior management.
“ASX is ubiquitous — you simply cannot buy and settle on the Australian public equities and futures markets without relying on ASX and its systems,” said ASIC Chair Joe Longo. “The inquiry provides an opportunity for ASX to bolster market trust.”
The move comes as confidence in Australia’s stock market has been dented by a protracted slowdown in initial public offerings. Last week, Blair Beaton, ASX’s head of listings, resigned amid growing pressure on the exchange operator.
ASX Response and Broader Context
The ASX said it welcomed the inquiry and pointed to its five-year transformation strategy launched in 2023 as evidence of its commitment to reform. ASX Chair David Clarke acknowledged the gravity of the regulator’s intervention, saying the company would fully cooperate.
“We acknowledge there have been incidents that have damaged trust in the ASX,” Clarke said.
ASIC has been increasing pressure on the exchange in recent years. In 2024, the regulator sued ASX for allegedly issuing “deceptive and misleading” statements about the progress of its technology upgrade. The project, aimed at replacing legacy infrastructure, was ultimately abandoned after facing delays, cost overruns, and concerns about feasibility.
In December, a hardware glitch caused a significant trading disruption, further eroding market confidence and prompting renewed scrutiny from regulators and investors.
Potential for Major Overhaul
Longo likened the inquiry to ASIC’s landmark 2018 review of Commonwealth Bank of Australia, which exposed cultural and risk management failings and led to 35 reform recommendations. Commonwealth Bank has since become the country’s most valuable listed company, with its market capitalization recently surpassing A$300 billion (US$195 billion).
“This is not a witch hunt,” Longo said. “This is about accountability, transparency, and restoring trust in a system that underpins every listed company and investor in Australia.”
