ASX Limited: Exchange Abandons Margin Guidance as Regulatory Remediation Costs Lock In Years of Elevated Spending
FY26 results briefing, August 12, 2026, Sydney
ASX Limited used its full-year results briefing to confirm what investors had feared since May: the cost of cleaning up after the ASIC Inquiry and modernizing its technology stack will weigh on margins well into FY28, and management has now stopped even trying to guide the market on where those margins will land. Operating revenue for the year ended June 30, 2026 rose 13.3% to $1.25 billion, but underlying net profit after tax grew just 5.2%, as total expenses jumped 21.1% to $557.4 million. The EBITDA margin compressed 180 basis points to 61%.
Margin Guidance Quietly Dropped
The most consequential disclosure came in response to a question from Macquarie's Andrew Buncombe, who noted the absence of any medium-term margin or cost-to-income commentary in the pack. CFO Andrew Tobin confirmed the omission was deliberate. "We have deemphasized that metric as a performance metric, and that really reflects the investment profile that we've got in the organization in terms of the elevated expense base that we announced in May," Tobin said. ASX is now steering investors exclusively toward its underlying return on equity target of 12% to 14% over the medium term, an implicit admission that margins will stay under pressure for an extended period while the exchange absorbs technology and remediation costs. Underlying ROE for FY26 came in at 13.7%, up just 10 basis points on the prior year despite the much larger revenue base.
Expense Growth Guidance Reconfirmed, and It Is Not Small
Management reconfirmed FY27 total expense growth guidance of 18% to 21%, with operating expense growth excluding depreciation and amortization expected at 13% to 16%. Tobin identified three drivers: technology modernization costs including licensing, support and maintenance as more platforms move to the cloud; the multi-year Accelerate remediation program; and, a smaller contributor, targeted growth and efficiency investments. Critically, Tobin was explicit that the technology cost inflation "reflects industry trends and is expected to persist beyond FY27," and that Accelerate-related costs will also continue "beyond FY27." Asked by JPMorgan's Siddharth Parameswaran how quickly the FY27 expense step-up would flow through to FY28, Tobin pointed to the sequential acceleration already visible between ASX's first and second halves of FY26 as the best guide to trajectory, effectively confirming FY28 will not see meaningful relief. Capital expenditure guidance was also reconfirmed at $180 million to $200 million for FY27 and $170 million to $190 million for FY28, with depreciation schedules of 5 to 10 years on major projects and CHESS specifically amortized over 10 years.
Dividend Cut to Fund a Regulatory Capital Charge
ASX's dividend payout ratio was set at 75% of underlying NPAT for the FY26 final dividend, the bottom of its 75% to 85% target range, alongside a 2.5% discounted dividend reinvestment plan. The mechanism is explicitly designed to accumulate a $150 million capital buffer above the December 2025 net tangible asset value by June 2027, a commitment made to ASIC as part of the Accelerate Program settlement. As of year-end, $132.9 million of that target remained to be built, a task complicated by a $51.5 million significant-item loss in the period. Tobin told Jarden's Blake Dowsett that management has "a high degree of confidence" of hitting the target given the reduced payout ratio and continued DRP operation, which is expected to persist through at least the first-half FY27 dividend. Separately, successful delivery of the Accelerate Program could eventually allow ASX to seek release or reduction of a related $150 million capital charge agreed with ASIC, though that outcome is subject to regulatory assessment and independent assurance from Promontory.
Credit Downgrade Underscores the Governance Overhang
S&P downgraded ASX's long-term issuer credit rating from AA- to A+ with a stable outlook earlier in the year, citing findings from the ASIC Inquiry's final report on governance, capability and risk management. The exchange still carries $400 million of undrawn corporate debt facility capacity and plans to refinance $275 million of corporate bonds in the first half of FY27, but the downgrade is a tangible marker of how the regulatory episode has dented the credit profile of what has historically been viewed as one of the most conservatively capitalized exchanges globally.
Leadership Transition Arrives as Remediation Enters Execution Phase
Interim CEO Darren Yip confirmed that Anthony Attia, who brings "decades of experience across global exchange markets in Europe and the United States, spanning the full value chain of exchange operations," will start as Managing Director and CEO at the beginning of September. He inherits a five-workstream Accelerate Program now moving from design into implementation, having transitioned Clearing and Settlement boards to fully independent, non-ASX directors, established dedicated audit, supervision and risk committees, and appointed Lisa Wade as an independent CS Board director. Yip described the year as one in which the exchange "demonstrated operational resilience" through record trading volumes even as it worked through "the conclusion of the ASIC Inquiry, the settlement of ASIC's proceedings relating to the previous CHESS project, and a CEO transition."
New Regulated Pricing Model Creates a $13 Million Question Mark
FY26 was the first full year under ASX's new building-block pricing model for Issuer Services and Equity Post-Trade Services, under which revenue is derived by applying a regulated return to the efficient cost of service delivery. ASX accrued a $13 million over-recovery in the period, which will be rebated to customers. UBS analyst Kieren Chidgey pressed management on whether flat trading turnover in FY27 would allow ASX to retain the full rebate amount within the following year's revenue allowance; Tobin said that rising capex and opex under the model would likely increase the regulated revenue requirement regardless, meaning the outcome depends on the interplay between activity levels and the growing cost base. Full budget disclosure under the model is expected around October, with capital base updates every six months.
Underlying Business Momentum Remains Genuinely Strong
Beneath the cost story, the operating businesses performed well. Listings revenue grew 3.5% to $215.2 million on the back of the strongest listings year since FY22, with 100 new entities, $32.6 billion in quoted market capitalization added, up 85.5%, and 23 international listings versus a five-year average of 13. Glencore's planned ASX listing later this year was cited as evidence of the market's international relevance. Markets revenue rose 18.6% to $414.1 million on record interest rate futures volumes and a 24.2% jump in cash market trading revenue tied to global volatility. Technology & Data revenue climbed 8% to $297.6 million, and Securities & Payments revenue grew 19.4% to $327.7 million, helped by Austraclear revenue growth of 15.8% on spot debt issuance of $3.3 trillion. Momentum has carried into the new fiscal year, with $8.4 billion of net new capital added in July alone, cash market value traded up 12%, and futures and options volumes up 20% year-on-year.
Forward Bets: Tokenization, US Dollar Austraclear and AI
Management outlined incremental but notable expansion initiatives for FY27, including regulatory approval already secured to support US dollar-denominated securities on Austraclear, aimed at simplifying US dollar issuance for Australian borrowers. ASX also plans initial investments to tokenize Austraclear bonds, which Yip said "would enable near real-time, 24/7 collateral movements," reducing settlement fails and improving cross-time-zone collateral access. A new digital issuer platform is planned to reduce operational risk through straight-through processing. On artificial intelligence, Yip said the exchange will "explore a range of AI use cases to enhance processes, strengthen controls and lift productivity" during FY27, though he stopped short of quantifying any efficiency benefit, and Tobin separately confirmed growth initiatives represent only a small fraction of the overall FY27 expense increase, with technology modernization and Accelerate remaining the dominant drivers.