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Australia’s markets regulator has sued the country’s stock exchange, accusing it of making “misleading and deceptive” statements about the progress of the botched modernization of its clearing and settlement system.
The Australian Securities and Investments Commission, which regulates Australian companies, said in a lawsuit filed on Wednesday that there had been a “collective failure” by the ASX board and management to upgrade its blockchain-based platform.
But the upgrade, originally touted as a leading blockchain initiative, was abandoned in November 2022 after seven years of development. The aborted upgrade sparked criticism of ASX from the banking industry, government and the Australian Reserve Bank.
In its lawsuit, Asic cited a February 2022 statement from ASX saying the blockchain upgrade was progressing well and was on schedule for launch in April 2023.
Six weeks later, ASX said the upgrade was likely to be delayed and commissioned consulting firm Accenture to conduct a review. Accenture’s review found the project was only 63 percent complete.
Asic claimed that the February update was “misleading and deceptive” because there were no reasonable grounds for ASX to say the upgrade was on schedule.
Asic chairman Joseph Longo said the botched upgrade of the settlement platform, which he described as “critical national infrastructure”, had implications for all market participants that rely on ASX.
“The ASX’s statements go to the core of trust in the integrity of our markets. We believe this was a collective failure of the then ASX board and senior management,” he said.
Asic said it had not yet decided what penalty the company would seek as a result of the legal proceedings.
ASX chief executive Helen Lofthouse said in a statement that the exchange recognised the “importance and seriousness of these proceedings”.
The exchange then commissioned Tata Consultancy Services to develop a new clearing and settlement platform.
