ASX investor sues former directors over CHESS collapse

A shareholder of the Australian Securities Exchange has taken legal steps against former directors and officers, claiming they breached their duties during the failed CHESS replacement project.

The ASX acknowledged in a market update that Rosherville, a shareholder, sought Federal Court approval to file a statutory derivative action under the Corporations Act. The action would proceed on behalf of the exchange.

The exchange stated the application seeks permission to begin proceedings against certain former officers and directors. No individuals were named in the filing.

This type of legal action allows a shareholder or officer to sue for a company when harm has occurred but the company itself isn’t pursuing claims. Rosherville contends the former leaders failed in their duties while overseeing the CHESS project, which aimed to upgrade the exchange’s clearing and settlement system.

The ASX isn’t a defendant in the case. The move follows prolonged regulatory scrutiny of the project, marred by delays, rising costs, and governance issues.

In June, the exchange admitted misleading market participants about the project’s timeline in early 2022. It knew by December 2021 that delays were likely but still claimed in February 2022 that the project was “progressing well” toward an April 2023 launch. A month later, it reversed course. Regulators imposed a $23 million fine for the misstatements.

The project was paused in November 2022 after the ASX wrote off $245–$255 million in costs. Internal reviews at the time flagged major unresolved risks. A year later, the exchange announced a revised plan, dividing the replacement into two phases. The first phase, focused on clearing services, launched in April 2026.

For investors, the CHESS failure revealed deeper problems in the ASX’s ability to manage critical infrastructure. As Australia’s dominant financial market operator, the exchange faced repeated outages and reliability concerns in 2023. The Reserve Bank of Australia warned it had significant work ahead to meet expectations for such a vital system.

The consequences extended beyond the project. In October, the ASX dissolved its Corporate Governance Council, replacing it with an advisory group to improve oversight. Former CEO Helen Lofthouse, who took the role in August 2022, resigned in February amid growing pressure over the delays. Lofthouse had spent 11 years at the ASX, previously leading its markets division.

Regulators acted separately in August 2024, when the Australian Securities and Investments Commission filed civil penalty proceedings against the exchange. The case alleged misleading statements about the project’s progress during the same period.

The ASX has since adopted a new approach, though its reputation and the costs borne by market participants may take time to recover. If approved, the derivative action would require a court to assess whether former leaders neglected their oversight of a project that became one of the exchange’s most costly and disruptive failures.

The Federal Court hasn’t set a timeline for ruling on Rosherville’s application. The ASX declined further comment.