RBA pressure on ASX persists as clearing shortcomings remain

Sept 23 (Reuters) - ASX's clearing and ‌settlement facilities continue ​to fail ​to meet the central bank's expectations in "several important areas", including governance and risk management, despite progress during the year, Reserve Bank of Australia said on ‌Wednesday.

The exchange operator has been under heightened regulatory scrutiny since abandoning its ⁠blockchain-based CHESS replacement project in 2022, following a series of operational disruptions that prompted regulators to demand improvements ‌in governance, technology resilience, and risk ‌controls.

The RBA's 2026 assessment of the ASX clearing and settlement facilities found that one or more facilities only "partly observed" requirements relating to governance, comprehensive risk management, credit risk ​and operational risk.

The RBA said it remained concerned that ASX's governance arrangements had not consistently given sufficient priority to the interests and obligations of the clearing and settlement ⁠facilities.

Austraclear, ASX's debt securities settlement facility, was rated "partly observed" against operational risk standards, with the RBA saying further work was ​needed across the ASX clearing and settlement facilities to ensure critical services could be maintained during severe or prolonged disruptions.

The RBA said ASX had ​established a Transformation Portfolio during the year to ‌address the deficiencies, adding that the central bank had also set clear expectations over target outcomes, without specifying a timeline over which they must ⁠be achieved.

"ASX is undergoing a period of substantial organisational change in response to several long-running issues," said RBA Assistant Governor (Financial System) Brad Jones.

"Despite progress during the year, ASX is still not meeting the ⁠RBA’s expectations in several important areas."

The central bank, which oversees clearing and settlement systems, said in its ​report that it had made no new recommendations in this year's assessment.

The RBA added that it would maintain heightened supervisory scrutiny of the ASX during the next assessment period, focusing on areas where it ‌must deliver improvements, including the governance and independence of the clearing and settlement facilities, and operational and cyber resilience.

The assessment follows an inquiry ‌by the Australian Securities and Investments Commission launched in June that found longstanding shortcomings in ASX's ⁠governance, capability and culture.

ASX said it had ‌acknowledged the release of ​the RBA's assessment.

The exchange's shares traded more than 1% lower as of 0332 GMT.

($1 = 1.4081 Australian dollars)

(Reporting by Rajasik Mukherjee; Editing by Mrigank Dhaniwala and ‌Ronojoy Mazumdar)

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