RBA Flags Governance and Risk Shortfalls Across ASX Clearing and Settlement Facilities

The Reserve Bank of Australia has again found important gaps in the way ASX manages governance and risk across its clearing and settlement infrastructure, even as the exchange operator recorded progress in several areas during the past year.

In its 2026 assessment of ASX clearing and settlement facilities, released September 23, the RBA said one or more of the four facilities only partly observed standards covering governance, the comprehensive management of risks, credit risk and operational risk. Many other individual standards were rated observed or broadly observed.

Those findings keep pressure on ASX to show that its current overhaul can produce lasting improvements without weakening the reliability of infrastructure at the center of Australia’s securities markets. The RBA said ASX had established a Transformation Portfolio during the year to address longstanding shortfalls in governance, capability, culture and risk management, and that it had set clear expectations for the outcomes the program needs to deliver.

Operational-risk ratings improve, but the RBA draws a narrow line

ASX Clear and ASX Settlement, the two facilities that depend on the Clearing House Electronic Sub-register System, or CHESS, recorded the clearest improvement. The RBA upgraded both from “not observed” to “partly observed” against the Operational Risk Standard after ASX strengthened CHESS resourcing and contingency arrangements.

Following the December 2024 CHESS batch settlement failure, a technology problem prevented the scheduled settlement of equity-market trades and forced the batch to be completed on the next business day. The incident prompted the RBA to conduct an out-of-cycle assessment in March 2025 and downgrade ASX Clear and ASX Settlement to not observed for operational risk.

The rating change is deliberately narrow. The central bank said the upgrades recognize specific improvements to CHESS and do not amount to an assessment of broader improvement in ASX’s management of operational risk. That distinction matters because ASX’s clearing and settlement responsibilities extend beyond one system, and the RBA’s standards look at the resilience of the facilities as a whole.

ASX also completed the first stage of its CHESS replacement program this year. CHESS Release 1, which covers clearing services, went live on April 20, 2026, and ASX says the service continues to operate normally. Release 2 is intended to replace settlement and sub-register functions. The successful first release removes one near-term delivery risk, but it does not eliminate the broader governance, risk-management and operational-resilience issues highlighted by regulators.

Governance and financial-risk controls remain central concerns

Technology is not the only area where the RBA still sees weaknesses. One or more ASX facilities partly observed the Governance Standard and the standard for the Framework for Comprehensive Management of Risks. Credit risk, a standard that applies to the central counterparties, was also among the areas where one or more facilities were rated partly observed. In the 2025 assessment, the RBA had downgraded both ASX Clear and ASX Clear (Futures) to partly observed for credit risk after identifying problems with financial risk models and related controls.

ASIC’s separate inquiry provides broader context for the governance and risk-management concerns. In April, the Australian Securities and Investments Commission published the final report from its inquiry into ASX, which examined governance, capability and risk management across the group. ASIC said the inquiry identified shortcomings that required substantial reform and noted that ASX had committed to a package of actions intended to strengthen critical market infrastructure.

Among the resulting measures are stronger independence for the clearing and settlement facility boards, a reset of ASX’s Accelerate transformation program, changes to leadership and an additional A$150 million capital charge to be built by June 30, 2027 and held until agreed remediation work is completed to ASIC’s satisfaction. ASIC also said in April that the clearing and settlement facility boards had become fully independent after three ASX Limited directors resigned from those boards in February.

These measures do not replace the RBA’s Financial Stability Standards assessment. The two regulators have different but complementary responsibilities, with the RBA focused on financial stability and systemic risk in clearing and settlement facilities and ASIC responsible for market and facility licensing and conduct obligations. The overlap means ASX is being tested on both the design of its reforms and its ability to execute them while continuing to run critical services safely.

The next test is delivery without disrupting critical infrastructure

In the RBA’s framing, the issue is less whether ASX has started enough projects than whether those projects can produce durable operating changes. The central bank said the Transformation Portfolio could provide a pathway to the standard expected of a critical market-infrastructure operator if it is delivered effectively.

Execution is especially important because ASX must run existing systems, continue technology replacement work and strengthen risk controls at the same time. In an August update, the RBA’s Payments System Board acknowledged initiatives aimed at improving CHESS resilience and supporting the safe delivery of CHESS Replacement Release 1, but said significant challenges involving governance, culture and risk management still required sustained focus.

RBA Assistant Governor for the Financial System Brad Jones said the latest assessment showed ASX was still not meeting the central bank’s expectations in several important areas despite progress during the year. He also emphasized that the organizational reset must be delivered without compromising the safe and reliable operation of critical infrastructure.

For market participants, the practical significance lies in what the facilities do each day. ASX Clear stands between buyers and sellers for cash equities and certain derivatives, while ASX Settlement operates the settlement system and electronic securities depository used for Australian cash equities. Weaknesses in governance, risk controls or operational resilience at those facilities can therefore have consequences beyond ASX itself.

A concrete regulatory milestone now sits ahead. ASIC requires ASX to build the additional A$150 million capital charge by June 30, 2027 and hold it until the agreed remediation work is completed to the regulator’s satisfaction, giving investors and market participants another measurable point for assessing whether the broader reset is translating into durable change.