John Durie: ASX chair needs to move on

The ASIC misleading markets case against the ASX could be dismissed as simply covering its own backside, if the consequences of the action were not so serious.

If successful, ASIC will fundamentally undermine the ASX’s credibility as a quasi-market regulator and operator, and ASX chair Damian Roche must realise those potential consequences today and begin the restoration process.

Friday’s results announcement would be a convenient date to unveil his plan, starting with Roche nominating his own departure date.

An obvious replacement exists in former APRA boss Wayne Byres. The new chair would then take a look at the role present chief Helen Lofthouse and others played in the unmitigated CHESS system replacement debacle.

ASIC boss Joe Longo and enforcement chief Sarah Court can take some credit for actually taking the case. Having told everyone they were investigating, something had to happen.

But, they are running the action against the ASX, an entity they are meant to closely regulate, some 30 months after the alleged events took place.

Surely neither can believe the reported statement from court no individuals were named, as there was a collective responsibility for the abysmal long-running operating failure of the CHESS refresh program.

The ASX is a technology company which can’t manage its own systems. Every company has faced technology glitches, but the issue here is more fundamental and hovers around whether the ASX kept its shareholders informed.

If it was collective failure then ASIC should take the whole board and senior management off to court for not keeping the market informed.

ASIC has done this elsewhere and should take the same course of action over the entity with which it has direct responsibility.

That is where it gets a little tricky, given ASIC’s involvement as ASX regulator and the involvement of ASIC executives in the scrutiny of the market operator.

If this action is a matter of ‘too little too late’, the reality is ASIC has also missed the plot when it comes to the ASX because it was always managed in a way which was “easier” to regulate.

How much better would Australian capital markets be served if the ASX was forced to spin off its clearance role and, like the US, have an independent clearing house, actually forcing the ASX to compete with the likes of CBOE and others.

There are some who will argue ASIC is kicking an easy can in the ASX. We all know what a walking mess the market operator is, but there needs to be accountability.