ASX clearance and settlement facilities fall short of RBA standards

This includes downgrades in credit risk, collateral and settlement finality. Other standards were considered to be ‘observed’ or ‘broadly observed’ by the ASX CS facilities.

RBA made 26 recommendations, relating to new and ongoing items, to the ASX including:

• Obtain assurance that it has addressed gaps in its risk appetite statement and strategy to return to risk appetite;
• Ensure its risk transformation plan is appropriately resourced and implement regular reporting on the plan;
• Conduct a review of business continuity and contingency arrangement across the CS facilities; and
• Comprehensively improve data and reporting controls for financial risk models and address issues identified in the assessment period.

In a media statement, the RBA said that the ASX still has “considerable work to do to meet the bank’s expectations for an operator of critical market infrastructure”, particularly in light of “recent shortcomings” like the December 2024 failure of the CHESS batch settlement system.

What they said: “This assessment highlights that ASX still has more work to do to in strengthening its governance, risk culture, and frameworks for managing operational and financial risk,” Jones said.

“We are expecting meaningful progress over the coming year and will consider further regulatory responses if necessary.”

In a separate media release, ASX chair David Clarkes said: “The ASX Boards have heard the RBA’s concerns clearly, particularly around operational risk management".

ASX CEO Helen Lofthouse added that: "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," Lofthouse said.