The ASX Ltd (ASX: ASX) share price is surging today despite a joint investigation by the Australian Securities and Investment Commission (ASIC) and the Reserve Bank of Australia (RBA) finding the company's implementation of a planned systems upgrade was "largely not consistent" with industry practices.
On 16 November last year, the ASX was forced to end the trading day early when technical issues arose from a botched systems upgrade. While independent assessor IBM Australia found the stock exchange operator met industry practices in 58 out of 75 of the capabilities assessed, it missed in 17.
Near the market close today, shares in the company were trading for $88.52 – up 3.01%. The S&P/ASX 200 Index (ASX: XJO), for context, is 0.35% higher.
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ASX share price lifts after ASIC investigation finishes
When it came to business case development, resourcing, stakeholder engagement, and incident management of the systems update, the ASIC investigation found ASX met or exceeded industry practice.
However, ASIC and its partners found the system was not ready for implementation in mid-November and the ASX should have been more cautious. As well, it found risk management "did not meet industry practices" and that there were "gaps" in the rigour applied to risk management.
The investigation also made 7 key recommendations to ASX relating to risk, governance, and testing; among others.
ASIC chair Joe Longo said:
The independent expert found that ASX met or exceeded leading industry practices in most areas, but the conclusion that the project was not ready for go-live is very disappointing. ASX has acknowledged and accepted the need for improvement.
We do, however, require assurance that these improvements are implemented effectively and result in an overall improvement to ASX's enterprise-wide project management practices.
Despite today's findings, the ASX share price is lifting today.
A separate investigation into whether ASX met its obligations under the Australian Market Licence, is still ongoing.
ASX responds
In a media statement, the ASX acknowledged the report findings and said it would address all the recommendations for improvement. The company added that management did believe it was ready for go-live, contrary to the findings of ASIC and the RBA.
ASX managing director and CEO Dominic Stevens said:
Last November's market outage fell short of ASX's high standards. We believed that the software was ready for go-live, as did our technology provider Nasdaq. Clearly there were issues, which was particularly disappointing given the significant progress we have made on resilience in recent years.
He added
ASX is well advanced in developing a detailed response plan for execution over the next 12 to 18 months, and we'll commission the independent expert to review our actions to meet its recommendations. Our delivery of this program of work will be under the oversight of ASIC and the RBA.
ASX share price snapshot
Over the past 12 months, the ASX share price has fallen 0.85%. The 200 largest companies on its trading system have outperformed it by about 23 percentage points.
ASX Ltd has a market capitalisation of about $16.6 billion.
