‘Jobs for the old boys’: ASX trading outage spark calls for accountability

The head of powerful corporate governance firm ISS Vas Kolesnikoff has called for changes at the top at ASX, as the market operator continues to take fire over a full day trading outage that crippled the bourse.

The ASX suffered its third major outage in nine years on November 16 and the key system for options trading is still down, with brokers given no timeline for when it will return.

The ASX's trading outage has triggered calls for accountability.
The ASX’s trading outage has triggered calls for accountability.Credit:James Alcock

While Mr Kolesnikoff stopped short of calling for the resignation of ASX chief executive Dominic Stevens, who has been at the helm of the operator since 2016, he said the ASX’s board had been put on notice. Mr Stevens was was paid a base salary of $2.1 million this year, 20 per cent higher than his predecessor.

“The role of the CEO in a monopoly is different. He’s got to be providing a service that, at the end of the day, can’t falter. Whether the CEO should resign? Not sure. If it happens more often, maybe.”


However, Mr Kolesnikoff said shareholders need more accountability for what went wrong and the board should take responsibility. “Management has to be accountable, because it is a monopoly and you can’t just switch off,” he said. “The board should have been making sure this was right.”

Directors stop being “independent” after 12 years as they become too close to management and lose sight of the company’s evolving needs, Mr Kolesnikoff added. ASX chair Rick Holliday-Smith has been a director for 14 years and chair since 2012.

“Management needs to be updated all the time so the skills of the board meets the changing requirements of the company,” he said. “Rick Holliday-Smith has been the chairman for a long-time.”

An ASX spokesman said the CEO and the board “support management’s strategy to meet the ‘new needs for the company’.”

However, an executive at a major broking firm, who spoke on the condition of anonymity fearing backlash from the ASX, said there is a “significant problem with management” at the ASX.

“Their board is a tired board. Their leadership is a tired leadership. They’ve lost their power,” he said.

The executive added that a number of key projects – including the Pershing to Broadridge’s Summit system change in 2016 and the overhaul of ASX’s CHESS clearance and setllement system – “had gone badly wrong”.

“I think there are too many old-timers there. It’s just jobs for the old boys and there’s not enough young people coming through,” he said.

Morningstar analyst Gareth James and Ord Minnett chief Karl Morris said the trading outage is proof the ASX’s monopoly status has prevented it from investing sufficiently in technology upgrades. The ASX has strongly denied this.

Investors and former ASX employees, who spoke to The Age and Sydney Morning Herald on the condition of anonymity, said the problem with the ASX was project execution, not investment.

The ASX did not respond to questions about whether anyone at the company would lose their job or whether the ASX was conducting an internal review to determine accountability.

“All outages are disruptive and regrettable,” a spokesman said. “We are working closely with our technology provider Nasdaq and continuing to investigate the outage, as well as cooperating with ASIC’s investigation.”

The spokesman said the ASX’s executive committee is made up of five women and eight men, with most serving for less than five years.

Morgan Stanley said the ASX should increase its capital expenditure to run a parallel technology system during the CHESS upgrade to prevent another outage.

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Source: Thanks smh.com