Australia's ASX says 'turning point' reached after trading outages
- The ASX has faced a number of trading outages and settlement delays over the past three years following a failed technology overhaul
ASX leadership confirms a turning point in regulatory challenges, upholding a reduced dividend payout and increased cost projections to fund ongoing technology overhauls and meet compliance.
- ASX's ongoing regulatory challenges and technology overhaul.
- The decision to maintain a lower dividend payout ratio.
- Increased operating and capital expenditure forecasts.
SYDNEY: The Australian Securities Exchange’s chair said on Thursday the company had reached a turning point in addressing its regulatory troubles, and maintained its lower dividend payout ratio and higher cost guidance for the year ahead.
The ASX has faced a number of trading outages and settlement delays over the past three years following a failed technology overhaul, which led the Australian Securities and Investments Commission to order the exchange to hold an extra A$150 million ($105 million) in capital and renew its infrastructure.
“My clear view is that ASX has reached an important turning point,” ASX Chair David Clarke told shareholders at the company’s annual meeting on Thursday.
“We did not get here through one action or one appointment, but through several years of confronting difficult issues, making important changes and rebuilding key foundations step by step.”
To help meet the regulator’s order issued last December, ASX cut its dividend payout ratio from 85% to 75% of underlying net profit. Clarke said on Thursday the payout ratio would remain at 75% for at least the interim dividend period in the current financial year.
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Some investors had pushed the ASX to increase the payout ratio as the exchange was ahead of schedule in meeting the capital charge.
“The board believes that we must achieve the right balance between continuing to provide returns to shareholders, strengthening ASX’s financial resilience and investing in the critical market infrastructure we operate,” he said at the company’s annual meeting.
New ASX Chief Executive Anthony Attia said the exchange would record 18% to 21% growth in operating expenses in the current financial year and capital expenditure would be between A$180 million and A$200 million.
Both expenses and capital expenditure forecasts were raised earlier this year to fund the ASX’s ongoing technology overhaul.
ASX shares were trading 0.3% higher on Thursday, as the S&P/ASX 200 index was down 0.35%.