Australia's ASX says 'turning point' reached after trading outages

The Australian Securities Exchange (ASX) has declared a significant milestone in resolving its regulatory challenges, according to its chair, David Clarke. Speaking at the company's annual meeting, Clarke stated that the exchange has reached an important turning point in addressing its regulatory issues and maintaining its lower dividend payout ratio and higher cost guidance for the year ahead.

The ASX has been grappling with numerous trading outages and settlement delays over the past three years due to a failed technology overhaul, which prompted the Australian Securities and Investments Commission to impose a requirement for an additional A$150 million in capital and mandated the exchange to bolster its infrastructure.

Clarke emphasized that this achievement was not a result of a single action or appointment but rather the culmination of several years of confronting difficult issues, making critical changes, and incrementally rebuilding key foundations. To comply with the regulator's directive issued last December, the ASX reduced its dividend payout ratio from 85% to 75% of underlying net profit, a policy that will remain in place for at least the interim dividend period in the current financial year.

While some investors had advocated for an increase in the payout ratio, given the exchange's progress in meeting the capital charge, Clarke assured shareholders that the board believes striking the appropriate balance between providing returns to shareholders, enhancing ASX's financial resilience, and investing in the essential market infrastructure is essential.

ASX's Chief Executive Officer, Anthony Attia, highlighted that the exchange anticipates a 18% to 21% growth in operating expenses and capital expenditure ranging between A$180 million and A$200 million for the current financial year. These projections for expenses and capital expenditure were escalated earlier this year to finance the ASX's continuous technology overhaul.

ASX shares experienced a 0.3% increase on Thursday, while the S&P/ASX 200 index saw a decline of 0.35%.