ASIC has recently launched an official investigation into the Australian Securities Exchange (ASX) in the wake of the $164 million collapse of its blockchain-based CHESS replacement project. The inquiry will delve into the ASX group’s governance, risk management, and operational capabilities, with a panel of independent experts tasked with leading the investigation and delivering findings by early 2026.
The Australian Securities and Investments Commission (ASIC) made the announcement in a press release, outlining the formation of a panel to scrutinize internal frameworks at the ASX following the failed blockchain initiative. The ASX’s ambitious efforts to modernize its CHESS platform using blockchain technology ultimately led to a significant financial loss of $250 million.
The inquiry will specifically focus on evaluating how the ASX governs its strategic initiatives, manages operational risks, and ensures the adequacy of capabilities within its leadership and technology teams. ASIC has appointed Rob Whitfield, a former Westpac executive, as the chair of the three-member panel, alongside Christine Holman and Guy Debelle, who bring extensive experience from various sectors.
The panel is expected to submit its findings to ASIC by March 31, 2026, with the final report set to be made public. This report will guide ASIC’s future actions in addressing any identified issues within the ASX group.
The collapse of the ASX’s blockchain project raises broader questions about the governance of major financial infrastructure providers and underscores the need for stringent oversight. Once hailed as a potential global model for blockchain integration in stock exchanges, the failed CHESS project now serves as a cautionary tale.
This probe is part of a broader trend of increased scrutiny over ASX’s operations. In a separate incident in August 2024, ASIC sued the ASX for allegedly misleading the market regarding the failed blockchain project. The project’s cancellation was attributed to technical flaws, project mismanagement, and regulatory concerns, prompting ASIC and the Reserve Bank of Australia (RBA) to closely monitor the ASX’s handling of critical infrastructure.
ASIC’s Chair, Joe Longo, criticized ASX for misleading investors and causing widespread market repercussions. He emphasized that the failure of the CHESS replacement project was a collective failure of the ASX board and senior executives, eroding trust in the company. Additionally, ASX faced a $1,050,000 penalty for compliance issues related to market integrity rules in a separate incident.
In conclusion, ASIC’s investigation into the ASX’s blockchain disaster underscores the importance of robust governance and risk management practices in the financial sector. The findings of the inquiry will shed light on the underlying issues that led to the project’s collapse and inform future regulatory actions to prevent similar incidents in the future.