Don’t support external candidates over our preferred duo, ASX tells its shareholders

The ASX says a former APRA chair and a business veteran are the best options for the market operator’s board vacancies despite two former executives seeking a seat at the table.

Phil Galvin and Bob Caisley have nominated for seats on the ASX board. Picture: John Feder

The Australian Securities Exchange urged shareholders to not support a board push by two external candidates, and that its preferred pair had shown their qualifications through a “self-assessment questionnaire”.

Distributing its notice of meeting on Thursday, the ASX said it was seeking to appoint two new directors to its 10-person board, replacing its outgoing chair and a director.

The ASX said it wanted former Australian Prudential Regulation Authority boss Wayne Byres as a board director alongside corporate veteran David Clarke who would be handed the chair role.

The market operator said the two men were the preferred candidates to sit on the board, and that a push by former market executives Phillip Galvin and Bob Caisley was unwelcome.

The ASX said its board had self assessed its skills, knowledge and experience through a questionnaire, and that Mr Byres’ expertise in financial regulation, risk management and governance complemented the board’s skill set.

Mr Clarke was backed due to his “depth of experience, including his experience in financial markets and services, executive leadership and corporate governance, complements the Board’s existing skills and experience”.

ASX chair Damian Roche is exiting from the board in the wake of damaging court claims from the corporate regulator that the ASX’s senior leadership failed to reveal the disastrous state of the CHESS replacement scheme for years, despite it being known to be a failure.

ASX’s outgoing chair, Damian Roche, and chief executive Helen Lofthouse.

The ASX shelved its CHESS replacement program in November 2022, and said the replacement of its clearing, settlement, and depositories systems through a blockchain-based replacement was not viable.

However, this came after years of delay to the program, which began in January 2016.

Mr Roche, who initially signalled he would stay on, announced he would leave the ASX on September 11 in the wake of moves by the Australian Securities and Investments Commission to sue the market operator over its CHESS disclosures.

The ASX said it did not support the attempts by Mr Caisley and Mr Galvin to seek seats on the market operator’s board.

The ASX said it had already refreshed its board, appointing six new directors in the past three years.

However, several ASX directors have been at the market operator for years, including Melinda Conrad who joined August 2016.

“The board is satisfied that the current composition of the board aligns with ASX’s strategic objectives and enables it to effectively govern ASX on behalf of shareholders in the best interests of the company,” it said.

Mr Caisley said the appointment of Mr Clarke marked another executive with experience in the banking sector taking on a top position at the market operator.

“I worry that they haven’t gone further afield to search for people who aren’t within the orbit of the usual chairs around Australia,” he said.

He said the RBA’s recent report card of the ASX’s clearing and settlement facilities, which found “significant further work” was required to deal with concerns, showed the problems at the market operator.

The report found the ASX was actually backsliding across several areas of financial stability over recent years.

Mr Caisley said he found this concerning given the ASX’s latest efforts to replace its clearing and settlement functions with a Tata Consulting BaNCS system, noting new laws passed in recent days gave ASIC and the RBA power to seize control of the ASX in the event of future failures.

“I don’t think the culture has changed or the organisation has changed enough,” Mr Caisley said.

“They don’t have any exchange experience on the board.”

The ASX said Mr Galvin, who worked for decades at Sydney Future Exchange and later the ASX, “does not have the skills, expertise, knowledge and experience to enhance the overall effectiveness of the board”.

But Mr Galvin said he was concerned about Mr Clarke’s expertise.

“Unless he brings some sensational ability to be able to properly reconstitute the board for what skills are required for its current challenges then you’ve got to say he’s just another member of the directors club,” he said.

Mr Galvin said ASX’s chief executive, Helen Lofthouse, should also be replaced.

“I’d be looking for her replacement after being an executive since 2015 and being CEO since August 2022,” he said.

“Seeing what the RBA assessment has come out that said there’s material degradation over the two years in core categories, it’s time someone else had a crack at it.”

Originally published as Don’t support external candidates over our preferred duo, ASX tells its shareholders