Forget everything else. The biggest story in Australian business and finance is not takeovers, superannuation or other deals, it’s the high-handed way the Australian Stock Exchange – under new CEO Tony D’Aloisio – is deliberately undoing years of good work in regulation, education and winning the trust of investors. And the board who appointed him is acquiescing in this abandonment of principle.

There have been three major strikes against D’Aloisio since his appointment last October.

There’s been the attempt to shuffle off regulation of the market to ASIC, a move rightly rejected by the regulator which has told the ASX to lift its game. The problem is that D’Aloisio was former chief executive partner of Malleson law firm and has no interest in the public good side of the exchange’s operations, even though its licence to continue to operate the market depends upon matters such as regulation.

Then there was the restructure of the ASX revealed two weeks ago. For a monopoly it was a disgrace. Profits are already high, charges could easily be lowered to boost earnings by encouraging more business.

Up to 15% of staff are being cut. with many going over the next fortnight, and a number of very senior executive positions, including the head of enforcement, remain either unfilled or have been filled by people unskilled in securities trading and oversight.

But more worrying was the complete abdication of the ASX’s regulatory role last week in the controversial GPT vote. Sydney Morning Herald columnist, Liz Knight, neatly nailed the ASX and the unimpressive D’Aloisio over this.

It could be argued that D’Aloisio favoured by omission the Westfield, Babcock & Brown side of the deal over making sure the rights of unitholders to approve the deal, was ensured.

The ASX didn’t and failed. Its fitness to hold the stock exchange licence should be looked at by ASX. It was a disgraceful avoidance of its responsibilities.

Because Westfield was allowed to vote its 6.5% on a vote that effectively meant the sale of shopping centres to it was being given the greenlight, the ASX has ensured that every shonk from now on will structure deals in a similar way.

It will be a greenlight to dodgy deals and we’ll be back to the dark days of the 80s and 90s when the ASX was effectively a club for insiders.

But the most revealing report on how the ASX has been suborned by D’Aloisio, with the board’s connivance, came in the weekend Fairfax press with the publication of a long feature detailing the problems in morale, staff numbers, the weakening of the regulatory and education roles and D’Aloisio’s reputation (at Mallesons and the ASX) for being a domineering and overbearing manager.

The feature detailed worrying regulatory stuff ups in supervision, the loss of enforcement clout, and the mad desire to slash costs and drive up earnings.

D’Aloisio seems unsuited to the regulatory side of the ASX, and by doing nothing in cases like GPT, seems to be daring ASIC to come in and take control.

ASIC and the federal government should certainly step in and demand the ASX meets its regulatory requirements, without any change (in assessing floats for example), or lose its licence.

At worse ASIC should suspend the ASX if it’s not going to do its regulatory job.

Punishing the shareholders and board would force some action.