ASX bosses say they are committed to reforming the troubled stock market operator and will beef up the supervision of management after the corporate regulator lashed its failings in a report released on Monday.
A panel of experts, appointed by the Australian Securities and Investments Commission (ASIC), said the ASX had underestimated what it needed to do to fix woes that had gone on for years, was insular and defensive, and had deficiencies in culture and leadership.
The panel, made up of senior banker Rob Whitfield, experienced non-executive director Christine Holman and former Reserve Bank deputy governor Guy Debelle, said ASX’s existing remediation program was not up to scratch.
It also said there were corporate governance weaknesses and a “lack of maturity with respect to practices that support organisational culture, incident response, stakeholder management, risk management and compliance management”.
The panel said the ASX had been too focused on making money at the expense of operating the nation’s stock exchange.
Problems at the exchange have included an outage a year ago, confusing two similarly named companies — a telco and a private equity group — in August, and the abandonment of a long-running and troubled IT project to move the crucial trade settlement system to the blockchain.
Helen Lofthouse is feeling the heat, three years into her role as ASX chief executive. (ABC News)
ASX has agreed to an overhaul under which it will “reset” a program called Accelerate, announced just over six months ago, that was designed to fix the exchange’s operational risk and technology problems.
It will also appoint independent directors to subsidiaries that clear and settle trades — a crucial area where the ASX has failed to deliver as recently as last Christmas — and hold an extra $150m in liquid assets.
ASX boss under increasing pressure
Shares in the ASX — which is listed on its own exchange — fell 5.68 per cent on Monday on the news that dividend payments to investors would be slashed as a result of the deal with ASIC.
The pre-Christmas deal with ASIC pours pressure on ASX chief executive Helen Lofthouse, who was elevated to the top job in 2022 and has been at the company for a decade.
She has already given up her short-term bonus this year in an effort to appease angry investors, market users and the ASX’s two regulators — ASIC and the Reserve Bank.
Treasurer Jim Chalmers said the report “raises very serious issues and the ASX must now act urgently to fix them, consistent with the commitments it has given to the regulators”.
Joseph Longo says lasting change is needed to restore trust in ASX. (Supplied: ASIC)
ASIC chair Joe Longo said the regulator would “ensure ASX’s commitments are delivered in full”.
“We are determined to see lasting change that restores trust and confidence in the ASX and the integrity of Australia’s financial markets,” he said.’Tough’ change but ASX ‘very committed’
Ms Lofthouse told the ABC she was fully committed to seeing through reform.
Asked why investors and market users should have confidence she could deliver what was needed, she said change was “tough” but she and her team were “very committed”.
“We’ve continued to see some change at the executive team level,” she said.
“This change also takes time. I’m fully committed to that.
“We’re absolutely determined and more determined than ever to successfully deliver that transformation.”
Her boss, chair David Clarke, said the board has already started doing more to hold Ms Lofthouse and her executive team to account by more closely supervising them.
“We’ve already upped, I guess, the level of inquiry, the activity, from a board point of view,” he said.
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“There’s a requirement for us on behalf of all stakeholders to be more pressing in our requirement for the sorts of things in the report.”
Asked if the agreement with ASIC represented ASX’s last chance with the regulator, he said: “That’s a question only ASIC can answer.”
He said the ASX was a crucial piece of infrastructure that was needed to aggregate the capital required to finance national resilience, the transition to renewable energy and AI.
“We are all committed to the success of the ASX. That is our overarching goal behind all this,” he said.