ASX’s Rising Costs Signal Challenges from ASIC Inquiry and Tech Upgrades

ASX Updates Expense Guidance Amid Regulatory Pressures

ASX Limited has revised its full-year 2026 expense growth guidance significantly higher, citing the ongoing impact of the Australian Securities and Investments Commission (ASIC) Inquiry and a strategic shift towards bolstering risk management and technology platforms. The exchange operator now expects expenses to grow between 13% and 15% excluding ASIC Inquiry costs, and between 20% and 23% when those costs are included.

This update follows the release of ASX's unaudited half-year results for the six months ending December 2025, which showed robust operating revenue growth of 11.2% to $602.8 million and an underlying net profit after tax (NPAT) increase of 3.9% to $263.6 million. Despite the strong top-line performance, the company’s expense base has expanded notably, driven by both strategic investments and regulatory-related costs.

Strategic Response to ASIC Inquiry Findings

The ASIC Inquiry Panel’s interim report, released late last year, delivered serious findings that have prompted ASX to accelerate and deepen its transformation efforts. Central to this is the development of a comprehensive Commitments plan, which outlines a strategic package of actions agreed with ASIC. Key elements include a reset of the Accelerate Program; ASX’s flagship technology modernisation initiative; and measures to enhance the independence of clearing and settlement facility licensee boards.

ASX CEO Helen Lofthouse emphasised the urgency of these changes, stating that the Inquiry’s findings have reinforced the company’s role as a critical market infrastructure operator that must uphold the highest standards. The company is investing heavily to upgrade its risk management capabilities and modernise its technology platforms, which has contributed to the upward revision of expense guidance.

Financial Highlights and Forward Outlook

Excluding ASIC Inquiry-related costs, total expenses for 1H26 rose 12.1% to $247 million, reflecting increased depreciation and amortisation charges alongside strategic program investments. Including these inquiry costs, expenses jumped 20% to $264.3 million. Despite these cost pressures, ASX maintained an underlying return on equity of 13.5%, consistent with the prior corresponding period, though the company has adjusted its medium-term ROE target downward slightly due to increased regulatory capital requirements.

Looking ahead, ASX plans to provide FY27 expense growth guidance at its June 2026 Investor Forum. Market watchers will be keen to see how the company balances ongoing regulatory demands with its growth ambitions, especially as it continues to implement the Commitments plan and navigate legal costs associated with the ASIC Inquiry.

ASX’s release of unaudited results ahead of the full 1H26 announcement on 12 February 2026 offers investors an early glimpse into the company’s financial health amid a challenging regulatory environment. The company’s commitment to transparency and strategic recalibration signals a readiness to adapt and strengthen its market infrastructure services for the future.