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Australia’s market regulator has sued the country’s stock exchange, alleging it made “misleading and deceptive” statements about the progress of its botched clearing and settlement system upgrade.
The Australian Securities and Investments Commission, which regulates companies in Australia, said in a lawsuit filed on Wednesday that there had been a “collective failure” by ASX’s board and management to manage an upgrade to its blockchain-based platform.
But the upgrade, which was originally billed as a leading blockchain initiative, was abandoned in November 2022 after seven years of development. The aborted upgrade triggered criticism of ASX from the banking industry, government and Australia’s central bank.
In its suit, Asic cited a statement made in February 2022 by ASX that indicated that the blockchain upgrade was progressing well and on track to launch in April 2023.
Six weeks later, ASX said that the upgrade would likely be delayed and appointed consultant Accenture to conduct a review. Accenture’s review found that the project was only 63 per cent complete.
Asic alleged that the February update was “misleading and deceptive” as there were not reasonable grounds for ASX to say that the upgrade was on track.
Joseph Longo, chair of Asic, said the botched upgrade of the settlements platform, which he described as “critical national infrastructure”, had an impact on all market participants which rely on ASX.
“ASX’s statements go to the heart of the trust in the integrity of our markets. We believe this was a collective failure by the ASX board and senior executives at the time,” he said.
Asic said it has yet to determine what penalty it would seek as a result of the legal proceedings.
Helen Lofthouse, ASX chief executive, said in a statement that the exchange recognised the “significance and serious nature of these proceedings”.
The exchange subsequently appointed Tata Consultancy Services to develop a new clearing and settlement platform.
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