ASIC Probes ASX CHESS Incident Amid Strong Financial Results
ASX Limited has reported a robust first half of FY25 with record operating revenue and a near 10% rise in underlying net profit, underpinned by strong growth across key business segments and a strategic focus on technology modernization.
- Operating revenue up 5.9% to $541.9 million
- Underlying net profit after tax rises 10.1% to $253.7 million
- Interim dividend increased 9.9% to 111.2 cents per share, fully franked
- Strong growth in Markets, Technology & Data, and Securities & Payments divisions
- CHESS replacement project advances with first industry test environment launching soon
Robust Financial Performance Amid Market Volatility
ASX Limited has delivered a strong set of half-year results for the six months ending December 2024, posting record operating revenue of $541.9 million, a 5.9% increase compared to the prior corresponding period. This growth was driven by heightened market activity and volatility, particularly in derivatives and cash market trading, reflecting the ongoing influence of global geopolitical tensions and central bank rate speculation.
The company’s underlying net profit after tax rose 10.1% to $253.7 million, supported by higher net interest income and disciplined expense management. Statutory net profit after tax was $243.5 million, slightly lower due to a $10.2 million after-tax significant item related to onerous lease provisions for ASX’s upcoming office relocation in Sydney.
Segment Highlights: Growth Across Key Divisions
The Markets division led revenue growth with a 19.9% increase, buoyed by futures and options on futures volumes amid volatile interest rate expectations. Cash market trading revenue also rose 11.3%, driven by increased trading activity and on-market traded value.
Technology & Data revenue climbed 6.7%, reflecting strong demand for derivatives market data and modest growth in technical services, including expansion at ASX’s Australian Liquidity Centre. Meanwhile, the Securities & Payments segment saw a 5.2% rise in revenue, fueled by higher clearing and settlement activity and increased Austraclear transactions.
The Listings business remained stable overall, with annual listing fees up 3.7% due to higher market capitalisation, though initial listings and secondary raisings revenue declined, impacted by the amortisation profile of historical revenue and several large delistings following takeover deals.
Strategic Focus on Technology Modernisation and Risk Management
ASX continues to prioritize its five-year strategy emphasizing technology modernization and regulatory uplift. A key highlight is the CHESS replacement project, with the first industry test environment for the Clearing services component scheduled to open imminently. This milestone marks significant progress in upgrading the critical clearing and settlement infrastructure.
The company also addressed a December incident that delayed CHESS Batch Settlement, resolving the issue promptly and publicly releasing a review. However, the Australian Securities and Investments Commission (ASIC) has since commenced an investigation, underscoring the importance of robust risk management as ASX modernizes its systems.
Outlook and Dividend Confidence
Looking ahead, ASX is optimistic about sustained momentum into the second half of FY25, supported by an uptick in new listings and significant capital raisings, including the $32 billion Chemist Warehouse and Sigma Healthcare merger. Futures and options volumes remain elevated, reflecting ongoing market speculation around Reserve Bank of Australia interest rate moves.
The board declared a fully franked interim dividend of 111.2 cents per share, up 9.9%, reflecting confidence in the company’s earnings quality and cash flow generation. Expense growth guidance for the full year remains between 6% and 9%, consistent with a disciplined cost management approach amid strategic investments.
ASX Managing Director Helen Lofthouse emphasized the company’s commitment to delivering value through technology innovation and customer engagement, signaling a transformative period ahead as ASX builds a new era for Australia’s financial markets.
Bottom Line?
ASX’s strong half-year momentum and strategic investments set the stage for a pivotal year, but the ASIC investigation into CHESS underscores ongoing operational risks.
Questions in the middle?
- How will the ASIC investigation into the CHESS incident impact ASX’s regulatory standing and project timelines?
- What are the potential financial and operational risks associated with the office relocation and onerous lease provisions?
- How will ASX balance ongoing technology modernization investments with its disciplined expense growth targets?
