RBA Flags ASX Again, Clearing Systems Still Miss Key Standards
Synopsis
The RBA says ASX clearing and settlement facilities have made progress but still fall short of expectations in several key areas.
Key Highlights
- The RBA finds many important risk areas about ASX clearing facilities.
- Concerns include governance, comprehensive risk management, credit risk and operational risk.
- Some of the critical areas with ASX are still “not meeting expectations,” RBA assistant governor Brad Jones said.
- The exchange has come under increased scrutiny from regulators after ditching its blockchain-based CHESS replacement last year.
The Reserve Bank of Australia has cautioned that the ASX’s clearing and settlement facilities still don’t meet its expectations across a number of key areas, despite improvements in the past year.
The RBA noted in its 2026 review of ASX clearing and settlement that one or more facilities were awarded “advanced observations” under compliance requirements relating to governance, comprehensive risk management as well as credit risk and operational risk. Because clearing and settlement are part of the infrastructure which underpins trade processing and completion in the financial markets, these areas matter.
ASX Has Made Progress, But More To Be Done
The RBA noted that the ASX has been on the way up during the course of what it called a year. To address governance, capability, culture and risk management gaps the exchange set up a Transformation Portfolio.
The RBA also stated that clear expectations for outcomes it wants to achieve in these areas had been set. Still, the central bank said that the ground is not yet sufficient to bring it in line with expectations.
The ASX is experiencing a time of major organisational upheaval due to several long-term challenges, Assistant Governor (Financial System) Brad Jones stated.
He said the latest assessment indicates that some progress was made over the course of the year, but it is still falling short in a number of important areas relative to what it would ultimately like to see from the ASX.
Governance and Risk Management are still Major Pain Pointers
Specifically, the assessment from the RBA turns to ASX governance and risk management and credit and operational risks. The exchange has been advocating improvements in these areas with its Transformation Portfolio.
Also, although the RBA has completed a new assessment of its compliance with these requirements, it appears that many are still in progress so some will ultimately be only partially fulfilled.
ASX Still Faces CHESS Fallout
Since it scrapped its blockchain-based CHESS replacement project back in 2022, the ASX has been under intense regulatory scrutiny. The project was designed to replace the legacy system for clearing and settlement but was eventually shelved.
Subsequent to this, a series of operational disruptions and regulators were then pushed to ask for enhancements in areas like governance, technology resilience and risk controls. The RBA’s most recent assessment shows that these challenges are still very much at the forefront of the exchange.
ASX Acknowledges the Assessment
The ASX said it has taken note of the release of the RBA’s assessment. This recent review further adds to the pressure on the exchange to improve its systems, governance & risk management while it continues with its restructuring work. The Assessment makes clear that progress has been made but there are still some key areas that need further work.
What this means for Australian companies and entrepreneurs
Australian businesses have been concerned with governance, risk and financial markets systems, and the importance they play in the RBA federally. As such, system providers to other firms invested in the ASX and its market infrastructure depend on these systems to continue supporting processes and completing trades for them.
The assessment also finds that an update to the combined technology alone is insufficient for businesses and entrepreneurs relating to the financial markets in Australia. The ongoing evolution of the ASX continues to necessitate strong governance, operational controls and risk management.
Source: Reuters
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