April 16 - S&P Global Ratings on Thursday reduced the issuer credit rating for the Australian Securities Exchange to "A+/A-1" from "AA-/A-1+", a move issued roughly two weeks after a domestic regulator flagged deficiencies in governance and risk management at the exchange operator.
The downgrade reflects a series of operational and programme failures at ASX that have attracted scrutiny. Regulators and market observers have pointed to multiple trading outages, the cancellation of the CHESS replacement programme and a settlement disruption in 2024 as a sequence of high-profile mistakes that exposed weaknesses in the exchange's controls and processes.
In its assessment, S&P underscored criticism aimed at ASX for what regulators described as weak governance, insufficient risk controls and an organisational culture that favoured short-term returns over the stability and integrity of critical market systems. The Australian Securities and Investments Commission had previously warned that ASX placed undue emphasis on shareholder returns at the expense of maintaining and upgrading core market infrastructure.
S&P signalled that its decision could be revisited should the company’s risk-management framework deteriorate further over the next two years. The ratings agency specifically highlighted concerns about clearinghouse risk management and the financial safeguards that support clearing operations as areas that could prompt a further downgrade if not improved.
Conversely, S&P outlined the most likely route for a rating improvement: the successful completion of ASX's governance and risk management upgrade programme. However, the agency judged that completion of that programme within a two-year horizon was unlikely, and therefore saw limited near-term upside for the rating.
ASX responded to the ratings action by saying it remained committed to addressing the findings of the ASIC inquiry. The exchange said it would implement its Commitments Plan in response to both the interim and final reports from the regulator.
ASIC's final report, published earlier this month after a ten-month inquiry, concluded that ASX had been relying on short-term "tactical solutions" rather than identifying and addressing the root causes of its problems, many of which were technology-related.
Despite the downgrade, S&P adjusted its outlook on ASX to "stable" from "negative", noting that the exchange is expected to retain its dominant market position over the next two years and remain an integral component of Australian financial market infrastructure. The long-term issue rating on ASX debt was also lowered to "A+" from "AA-".
In market trading, ASX shares rose as much as 1.3% in early trade, outperforming the broader S&P/ASX 200 index, which was up 0.2%.