ASX Faces Regulatory Scrutiny While Committing to Major Operational Overhaul

Transformation and Regulatory Context

ASX Limited’s 2025 Annual General Meeting provided a comprehensive update on the company’s ongoing five-year transformation strategy, with a clear focus on operational resilience, technology modernisation, and risk management enhancements. Chair David Clarke and CEO Helen Lofthouse acknowledged the challenges faced over the past year, including heightened regulatory scrutiny following the CHESS Batch Settlement incident and subsequent ASIC inquiry.

The Accelerate Program emerged as the cornerstone initiative designed to address these operational risks and embed stronger fundamentals across the organisation. This program aims not only to rectify current shortcomings but also to position ASX for sustainable growth and enhanced market confidence.

Financial Performance and Expense Guidance

Despite the operational hurdles, ASX reported a robust FY25 financial performance. Operating revenue increased by 7.0%, underlying net profit after tax rose 7.5% to $510 million, and dividends were lifted by 7.4% to 223.3 cents per share. These results reflect the strength of ASX’s diversified business portfolio and its ability to deliver shareholder value amid transformation.

Looking ahead, ASX confirmed its FY26 total expense growth guidance remains between 14% and 19% compared to FY25. This includes an estimated $25 million to $35 million in operating expenses related to the ASIC inquiry response. Excluding these inquiry-related costs, core business expenses are expected to grow toward the upper end of the 8% to 11% range, driven primarily by investments in key programs such as Accelerate.

Capital expenditure guidance for FY26 stands at $170 million to $180 million, with a similar range forecast for FY27 before anticipated reductions. These investments are largely directed toward the technology modernisation roadmap, which is critical to improving system resilience and supporting future growth.

Regulatory Challenges and Governance Enhancements

ASX faces significant regulatory scrutiny, including a wide-ranging ASIC inquiry examining governance, capability, and risk management frameworks, with an expert panel expected to report by March 2026. Concurrently, the Reserve Bank of Australia’s Financial Stability Standards assessment rated ASX’s operational risk management as “not observed” for certain entities, issuing 26 recommendations that ASX is committed to implementing.

In response, the ASX Board has strengthened oversight by splitting the Audit and Risk Committee and appointing Anne Loveridge, an expert in risk and financial services governance, to enhance regulatory and financial oversight. Executive remuneration has also been adjusted to reflect accountability, with reductions in bonuses for leadership roles linked to risk management.

Market Activity and Strategic Initiatives

Market activity remains solid, with a $6 billion increase in net new capital quoted in Q1 FY26, supported by IPOs and secondary raisings. Cash market trading volumes grew 18% year-on-year, driven by expectations of interest rate cuts and geopolitical volatility. ASX continues to innovate with new product launches such as carbon futures and expanded debt market data offerings, leveraging its data-rich environment to provide unique market insights.

ASX is also advancing reforms to corporate governance principles and listing rules to enhance market integrity and competitiveness, including assuming responsibility for governance standards through a new Independent Advisory Group and consulting on shareholder approval requirements for dilutive acquisitions.

Looking Ahead

The ASX leadership emphasised that the transformation underway is not merely a response to current challenges but a strategic rewrite of the company’s future. With the Accelerate Program at its core, ASX aims to build a more resilient, accountable, and growth-oriented organisation that can maintain its critical role in Australia’s financial markets.