The Reserve Bank of Australia (RBA) has issued a strong warning to the Australian Securities Exchange (ASX), emphasising the urgent need for foundational changes to its governance, culture, and risk management processes. These changes are specifically related to the ASX’s clearing and settlement operations, which the RBA considers critical to the overall stability of the Australian financial system. The ASX acts as a vital intermediary in the country’s financial markets, facilitating the clearing and settling of transactions. ASX Limited operates Australia’s primary securities exchange.
In addition to governance reforms, the RBA is mandating that the ASX accelerate improvements to its operational and financial risk management frameworks. The central bank also expects the ASX to meet all key milestones associated with its major technology projects, ensuring that these projects are delivered on time and within budget. These technology upgrades are deemed essential for maintaining the efficiency and reliability of the exchange’s systems.
According to RBA assistant governor (financial system) Brad Jones, the ASX is currently falling short of regulatory expectations for an operator of critical national infrastructure. Jones stated, “The ASX is not currently meeting the regulators’ expectations for an operator of critical national infrastructure. We are expecting meaningful progress over the coming year and will consider further regulatory responses if necessary.”
The RBA’s statement underscores the seriousness of the situation and signals that the central bank is prepared to take further action if the ASX does not demonstrate substantial and timely progress in addressing the identified shortcomings. The RBA will be closely monitoring the ASX’s progress over the coming year and is ready to implement additional regulatory measures if needed to ensure the stability and integrity of Australia’s financial markets.
