How Is ABE Using AI and New Securities to Transform Fixed Income Access?

Innovating Access to Fixed Income Markets

Australian Bond Exchange Holdings Limited (ASX, ABE) continues to push the boundaries of financial technology in the fixed income space with its latest quarterly update for Q1 FY26. The company has launched Rakuten AUD-denominated market-linked securities, expanding its suite of innovative investment products designed to offer retail investors and wealth managers greater access to tailored global fixed income opportunities.

This launch underscores ABE’s commitment to democratizing access to over-the-counter (OTC) markets, traditionally dominated by institutional players. By providing transparent and efficient infrastructure, ABE aims to level the playing field for Australian investors seeking exposure to diverse fixed income assets.

Technology and AI at the Forefront

ABE’s strategic focus on technology innovation remains evident with the progression of its proprietary Credit Analysis AI Tool (CAIT). Following successful beta testing in the previous fiscal year, CAIT entered pilot deployment during the quarter, demonstrating near-instant credit assessments using a blend of financial and non-financial data. Early results indicate accuracy on par with established credit rating benchmarks, positioning ABE to integrate this AI capability into its internal risk workflows and potentially monetize it externally.

Alongside AI advancements, ABE has enhanced its payments infrastructure to align with Australia’s evolving PayTo and New Payments Platform frameworks. The company completed testing for near real-time settlement capabilities, which promises faster transaction processing and improved operational efficiency. These upgrades pave the way for future atomic settlement functionality and support emerging digital bearer bond and tokenised asset models, including participation in Project Acacia with the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre.

Operational and Financial Highlights

Operationally, ABE improved client onboarding through digital identity verification upgrades, reducing setup times by over 30%, and enhanced its client and adviser portals with better automation, data transparency, and portfolio analytics tools. These improvements aim to boost user experience and support sales growth across existing and new client segments.

Financially, the company reported a net operating cash outflow of $0.7 million for the quarter, slightly higher than the previous quarter’s $0.6 million. This includes one-off annual payments for IT and insurance costs. Management anticipates a reduction in cash burn going forward due to revenue diversification and cost-saving measures, some of which are yet to be reflected in the financials.

Importantly, ABE secured a variation to its Australian Financial Services Licence (AFSL), enabling the termination of a costly corporate authorised representative appointment and unlocking additional revenue opportunities. This regulatory development is expected to improve the company’s cost structure and operational flexibility.

Looking Ahead, Capital Raising and Growth

With cash reserves at $279,000 and estimated funding for less than half a quarter at current burn rates, ABE plans to seek shareholder approval at its upcoming AGM to issue up to 25% additional shares and raise up to $10 million through convertible notes. These capital raising initiatives are critical to sustaining operations and funding growth initiatives, including further technology development and market expansion.

While the company remains confident in its strategy and operational improvements, the timing and success of these funding efforts will be closely watched by investors. The integration of AI tools, expansion of market-linked securities, and real-time settlement capabilities position ABE at the forefront of fintech innovation in fixed income markets, but execution risks remain.