The Reserve Bank of Australia's annual assessment, released on September 23, concludes that all four clearing and settlement facilities operated by the Australian Securities Exchange (ASX) either meet or largely meet multiple financial stability standards. However, the central bank assigned only a "partly compliant" rating to governance, integrated risk management, and operational risk across the board, indicating that the exchange still falls short of regulatory expectations in several key areas.

The financial stability standards assessed cover ASX Clear, ASX Clear (Futures), ASX Settlement, and Austraclear, with governance and integrated risk management each receiving a partly compliant rating for all four facilities. Credit risk was rated partly compliant for ASX Clear and ASX Clear (Futures), while it was deemed not applicable for ASX Settlement and Austraclear. Operational risk saw an upgrade to partly compliant for ASX Clear and ASX Settlement, though the other two facilities retained their previous ratings in this category.

CHESS Improvements Drive Partial Rating Upgrades

The RBA noted that ASX has strengthened staffing and contingency arrangements for the CHESS system and completed the first phase of the CHESS replacement project during the assessment period. As a result, the operational risk ratings for ASX Clear and ASX Settlement have been upgraded from "non-compliant" to "partly compliant." The central bank stressed that these upgrades reflect specific improvements related to CHESS and should not be interpreted as an overall improvement in ASX's operational risk management, adding that the facilities' ability to maintain critical services during prolonged outages still requires further strengthening.

Transformation Outcomes Remain Unproven

ASX has initiated a transformation program to address long-standing issues in governance, capability, corporate culture, and risk management. The RBA acknowledged that ASX has recently taken steps to enhance the independence of boards across its various clearing and settlement facilities, but it is still too early to determine whether these adjustments will lead to better decision-making in practice. The central bank also pointed out ongoing deficiencies in the implementation and controls surrounding risk models and data, though no new remedial recommendations were issued in this assessment.

The RBA stated it will focus on monitoring whether the existing transformation plan achieves its intended outcomes while ensuring that the overhaul does not compromise the safety and reliability of critical market infrastructure. In response, ASX Chief Executive Officer Anthony Atti acknowledged that the company recognizes there is still work to be done and will continue advancing its technological and transformation initiatives.