RBA pressure on ASX persists as clearing shortcomings remain
The assessment follows an inquiry by the Australian Securities and Investments Commission in June
The Reserve Bank of Australia (RBA) expressed concern over the Australian Securities and Investments Commission (ASIC) inquiry findings that ASX’s clearing and settlement facilities continue to fall short of meeting regulatory expectations in several critical areas, despite incremental improvements during the year. The RBA highlighted governance, risk management, credit risk, and operational risk as areas of concern in its assessment released on Wednesday (Sep 23).
The inquiry revealed that one or more ASX facilities only partially complied with governance, comprehensive risk management, credit risk, and operational risk requirements. ASX's Austraclear facility, responsible for debt securities settlement, received a "partly observed" rating for operational risk, indicating the need for further work across the clearing and settlement facilities to maintain critical services during severe disruptions.
The RBA emphasized that ASX has initiated a transformation portfolio to address these deficiencies but also set clear expectations for target outcomes without specifying a timeline. ASX's transformation efforts follow a series of operational disruptions and a shift away from a blockchain-based clearing system in 2022. The RBA maintained heightened supervisory scrutiny on the ASX, focusing on governance and independence, as well as operational and cyber resilience.
ASX shares fell more than 1% in response to the assessment, reflecting market confidence in the exchange's ability to address its identified issues.
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