Credit rating firm S&P Global has cut the Australian Securities Exchange’s issuer rating from “AA-/A-1+” to “A+/A-1” on Thursday, following a regulatory probe that uncovered serious governance and risk oversight deficiencies at the country’s primary stock market operator.
The rating reduction highlights ASX’s recent pattern of operational failures, including repeated system outages, a failed technology modernization project called CHESS, and settlement system breakdowns in 2024.
These operational problems have drawn sharp criticism from regulators who cite poor governance practices, insufficient risk oversight, and an organizational culture that appears to favor immediate profits over maintaining essential market infrastructure.
The Australian Securities and Investments Commission (ASIC) had earlier criticized ASX for focusing too heavily on delivering returns to shareholders while neglecting the maintenance and improvement of vital market systems.
S&P cautioned that ASX could face another rating cut if the agency determines that risk management practices, particularly regarding clearinghouse operations and related financial protections, worsen over the coming two years.
The rating firm indicated that an upgrade would most likely require ASX to successfully complete its governance and risk management improvement initiatives, though S&P considers this unlikely within the next 24 months.
Responding to the downgrade, ASX stated it was “committed to addressing the ASIC Inquiry’s interim and final reports by implementing our Commitments Plan.”
Following a 10-month investigation, ASIC concluded in its recently published final report that ASX had relied on short-term “tactical solutions” to address problems instead of tackling the underlying causes, which were primarily technology-related.
Despite the downgrade, S&P changed its outlook for ASX from “negative” to “stable,” noting that the company will maintain its market-leading position over the next two years and continue serving as a crucial part of Australia’s financial infrastructure.
The rating agency also lowered the long-term issue rating on ASX’s debt instruments from “AA-” to “A+.”
ASX shares gained up to 1.3% during early trading sessions, performing better than Australia’s broader S&P/ASX 200 index, which rose 0.2%.
