ASX acknowledges the release of the Reserve Bank of Australia (RBA)’s Financial Stability Standards (FSS) assessment of our clearing and settlement (CS) facilities.
The assessment covers the period from 1 July 2024 to 30 June 2025. This includes the out-of-cycle assessment of ASX Clear Pty Limited and ASX Settlement Pty Limited against its Financial Stability Standard
for Operational Risk. The out-of-cycle assessment followed the CHESS Batch Settlement incident in December 2024, and the RBA revised its rating for the Operational Risk standard to “not observed.”
This year’s FSS assessment shows that many of our facilities continued to receive ratings of “observed” or “broadly observed”. The report upgraded the rating on the standard related to general business risk, but we recognise there were downgrades in the areas of credit risk, collateral, and settlement finality.
This year’s report contains 26 recommendations, which include both new items and ongoing actions. ASX is committed to implementing all the recommendations.
ASX Chairman David Clarke said: “The ASX Boards have heard the RBA’s concerns clearly, particularly around operational risk management.
“As Chair, I want to emphasise that making meaningful progress in meeting these standards is a high priority as the Boards recognise the key role ASX plays as a source of stability for the Australian market. We have achieved notable improvements under the Group’s five-year transformation strategy, but it is essential we continue to apply appropriate rigour across all facets of our operations.
“Managing a turnaround within the context of operating critical market infrastructure requires careful navigation. We have a strong imperative to act with urgency, and we must do this while balancing risks in a complex environment.
“The Boards and management are aligned in ensuring future assessments show continuous improvement and not simply remedial action. Our focus remains on achieving meaningful progress while safeguarding the critical market infrastructure that underpins the financial system.”
Key developments during the assessment period
- Focus on improving risk management and elevating the focus on risk culture: bringing in new leadership capabilities across the team, including the appointment of a new Chief Risk Officer in March;
- Enhancing Board oversight on risk: splitting the ASX Audit and Risk Committee into two separate Board committees for more dedicated check and challenge and to facilitate broad ranging discussion on risk matters;
- Development of the Accelerate program designed to ensure strong strategic execution and drive consistent improvements in operational risk management and resilience;
- Strong progress in closing out remedial actions to manage aged assets, and steady execution of the technology modernisation roadmap including meeting key CHESS project milestones;
- Maintaining an elevated level of investment to drive technology modernisation: capex reached $176m in FY25, capex guidance for FY26 is between $170m and $180m and FY27 guidance of between $160m and $180m.
ASX CEO Helen Lofthouse said: “We are acutely aware ASX must accelerate our progress to rebuild trust with our regulators, particularly following the disappointing incidents of the past year.
“As we are in the middle of our transformation, the recommendations outlined in the RBA’s report reflect and align with our views of where additional focus and improvement is needed.
“In the area of operational risk, we are keenly focused on our contingency arrangements for CHESS. We have already completed several key items, such as fixing code and increasing memory, that will improve the resilience of the core system. And we are now progressing plans for various workarounds that should further improve contingency arrangements.
“Transforming a complex market infrastructure organisation is a marathon effort and we know that many of our initiatives require sustained effort over several years to deliver the benefits.
“Our focus on improving operational risk and resilience forms the centrepiece of the Accelerate program which will be the vehicle to ensure we execute well. It is a must-not-miss priority for ASX.”
