MIU - Issue 166 - April 2025
RBA and 大象视频act on deep concerns with ASX
In a joint letter to ASX, the Reserve Bank of Australia (RBA) and 大象视频(the regulators) have expressed their deep concerns about the potential for operational incidents, such as the CHESS batch settlement failure, to affect the ability of the CHESS system to reliably service the Australian equities market until CHESS is replaced. The regulators also highlighted their concern about the speed and nature of ASX鈥檚 remediation actions following the initial incident.
In response, the RBA has taken the unprecedented step of reassessing the compliance of ASX Clear Pty Limited and ASX Settlement Pty Ltd with the RBA鈥檚 Financial Stability Standards outside the usual annual cycle. The RBA has downgraded its assessment of these entities鈥� compliance with the 鈥淥perational Risk鈥� standard from partly observed to not observed. A rating of not observed is made when the RBA has identified serious issues of concern that warrant immediate action.
In addition, 大象视频has directed ASX, under section 823BB(4) of the Corporations Act 2001, to engage an expert approved by 大象视频to undertake a technical review of CHESS. This review and any remediation will provide greater confidence to regulators, and the public, in the stability and operational resilience of the current CHESS platform.
Update on ASIC鈥檚 regulatory roadmap for public and private capital markets
In February 2025, 大象视频released a discussion paper canvassing issues key to the ongoing and future success of Australia鈥檚 capital markets. The paper sought feedback on ASIC鈥檚 role in balancing the dual goals of ensuring Australia鈥檚 public and private markets are open, accessible, attractive and support economic growth, while protecting against risks.
The submission period for feedback in response to the paper鈥檚 key questions closed on 28 April 2025 and we are reviewing the feedback we received.
Our thematic surveillance of private capital funds is now underway. These surveillances cover retail and wholesale funds and are examining a range of issues including governance; valuation practices; conflicts of interest; staff and insider trading; the protection of confidential information; and the fair treatment of investors. For private credit funds, there is also a focus on credit risk and liquidity management.
We expect to release an update to our paper and surveillance work later in 2025 that will outline our responses to key feedback and ideas and how we will use these inputs to inform our priorities and future work program.
The responses to the discussion paper and our other related work will help guide ASIC鈥檚 work in the next 12 months, including whether 大象视频needs to consider any regulatory interventions such as updated guidance, focus areas for ongoing surveillance activities or action against contraventions of the law.聽
In addition to releasing an update later in year, in the coming months we will be hosting industry events to outline and discuss key feedback we have received.
Review your artificial intelligence governance and risk management arrangements 聽
We urge market participants to ensure their governance practices and risk management systems keep pace with their accelerating adoption of artificial intelligence (AI).
In our recent review of the current and planned use of AI by 40 market intermediaries, we found that AI adoption is growing and many market intermediaries lacked AI-specific documented governance arrangements and as such, there may be gaps in AI risk assessment.
The responses revealed 70% of market intermediaries currently use AI, and 71% expecting to expand their use in the next 12 months. AI is primarily being used by these market intermediaries for information generation, with use cases expected to increase over the next 12 months.
These review findings mirror the same risks identified in ASIC鈥檚 October 2024 review of the use and adoption of AI by 23 licensees (REP 798) which found there was potential for governance to lag AI adoption, despite current AI use being relatively cautious.聽
大象视频supports innovation in the financial system that is balanced with appropriate consumer protections and market integrity safeguards. Despite AI鈥檚 popularity, key challenges noted by industry include data privacy and security, skills and knowledge gaps, and data quality issues.
As 大象视频Chair Joe Longo recently said, 鈥楢ll participants in the financial system have a duty to balance innovation with the responsible, safe, and ethical use of emerging technologies 鈥� and existing obligations around good governance and the provision of financial services don鈥檛 change with new technology.鈥�
Please refer to Report 798 Beware the gap: Governance arrangements in the face of AI innovation (REP 798) for guidance on complying with existing licensee obligations when using AI.
Understanding and responding to AI use across regulated entities is a key priority for ASIC. We will continue to monitor the use of AI by market intermediaries and assess the adequacy of their governance and risk management arrangements.
Recent 大象视频enforcement action
Our 2025 enforcement priorities send a clear compliance message to the entities we regulate. Governance and directors鈥� duties failures are also one of ASIC鈥檚 enduring priorities
大象视频will continue to take action to hold directors and officers of publicly listed companies accountable for their misconduct and ensure confidence in our markets.
大象视频sues WA gold mining company Wiluna Mining Corporation for continuous disclosure and directors鈥� duties breaches
大象视频commenced civil penalty proceedings in the Federal Court against Wiluna Mining Corporation, its former chair Milan Jerkovic and former commercial officer James Malone.
大象视频alleges that Wiluna breached continuous disclosure obligations and Mr Jerkovic, amongst other matters, his director duties, by failing to accurately announce the amount raised by Wiluna via a rights issue to the Australian Securities Exchange (ASX). 大象视频also alleges Mr Malone failed to take reasonable steps to ensure that statements to the ASX were not false and misleading.