ASX Limited Guides to 18% to 21% Cost Growth in FY27 and Drops Its Margin Target, Making ROE the Only Yardstick Left
ASX Limited FY26 results briefing, August 12, 2026: record volumes lift revenue 13.3%, but regulatory remediation and technology inflation hold underlying profit growth to 5.2%
Costs are the story, and they are not peaking yet
ASX reconfirmed FY27 total expense growth guidance of 18% to 21%, including a contribution of about 5% from depreciation and amortization. Operating expense growth excluding D&A is guided to 13% to 16%. This follows FY26 expense growth of 21.1% to $557.4 million, which was 14.4% excluding $30.8 million of costs tied to the ASIC Inquiry. Revenue grew 13.3% to $1.25 billion, so costs outran revenue for a second consecutive year. The EBITDA margin fell 180 basis points to 61%, or 63.4% excluding Inquiry costs.
The CFO, Andrew Tobin, named technology modernization as the largest driver. License fees, support and maintenance, and cost inflation all rise as platforms such as CHESS Release 1 and the enterprise data and integration layers go live and move to the cloud. Tobin said the inflation "reflects industry trends and is expected to persist beyond FY27." Accelerate and wider remediation spending are also described as multi-year, with costs continuing beyond FY27. Growth initiatives are a minor part of the budget. Asked directly, Tobin said they are "not the lion's share" and "not a large part of the makeup of that expense growth."
Offsets are thin. JPMorgan asked what falls away as legacy systems are retired. Tobin said the dual-running of old and new CHESS is "a number of years away" from ending, because the existing system cannot be decommissioned until Release 2 is fully implemented. Management pointed to AI and license rationalization as efficiency levers but offered no quantification. Interim CEO Darren Yip pointed to the step-up in second-half FY26 expenses as the best guide to the FY27 trajectory.
Margin target quietly dropped
Macquarie's Andrew Buncombe noted that the medium-term margin and cost-to-income commentary had vanished from the presentation. Tobin confirmed it was deliberate: "We have deemphasized that metric as a performance metric," reflecting the elevated expense base. The primary measure is now underlying ROE, targeted at 12% to 14% over the medium term versus 13.7% in FY26. With costs set to grow faster than any plausible revenue line in FY27, the shift removes a benchmark ASX would likely have missed.
Regulated pricing begins to bite
FY26 was the first year that Issuer Services and equity post-trade services operated under the new building block pricing model, in which revenue is set as a regulated return on the efficient cost of providing the services. ASX accrued a $13 million over-recovery to be rebated to customers, driven by higher cash market activity. Securities and Payments revenue rose 19.4% to $327.7 million net of that accrual.
The model links ASX's higher spending to its revenue entitlement. Tobin told UBS that rising expenses and capital expenditure "will determine a higher revenue requirement," so the $13 million rebate could be fully absorbed in FY27 if turnover were flat, though he called that scenario theoretical. Tobin said the underlying inputs are published on Slide 42 of the presentation and updated every six months. The FY27 cost budget is due around October. The model's 12% ROE input follows a CAPM-type approach and moves with risk-free rates. Management reported no pushback from participants. Tobin said group operating expenses are a reasonable guide to the regulated opex base for now.
Capital, credit rating and the ASIC overhang
The ASIC Inquiry and the CHESS legal proceedings have concluded, but the financial consequences persist. ASX must accumulate $150 million above its December 31, 2025 net tangible asset value by June 30, 2027. At year-end $132.9 million remained to be accumulated, after a $51.5 million significant-item loss that included the ASIC settlement, a CHESS partnership milestone expense and the loss on disposal of Sympli. The payout ratio was cut to 75% of underlying NPAT from 85%, with a final dividend of $1.047 per share and a total of $2.065 per share. A 2.5% discounted dividend reinvestment plan will run for at least the next two dividends, with partial underwriting available if participation is weak. Tobin said the company has "a high degree of confidence" in meeting the target.
Separately, a $150 million capital charge agreed under the Commitments Plan could be released or reduced if ASX delivers the reset Accelerate Program, subject to ASIC approval. S&P cut the long-term issuer credit rating to A+ from AA-, citing governance and risk-management findings in the Inquiry's final report. The outlook is stable. ASX has an undrawn $400 million debt facility and plans to refinance $275 million of corporate bonds in the first half of FY27. From June 30, 2029, ASX must also hold net tangible assets sufficient for the financial resource requirements of its two market licenses, unless otherwise agreed with ASIC.
Accelerate is largely in the design phase, since the reset was only recently agreed with regulators. Governance changes already made include fully independent clearing and settlement boards with no ASX directors and the appointment of Lisa Wade. Promontory will independently assure progress. Execution is the main risk to the capital charge release.
Operating momentum is real
Markets revenue grew 18.6% to $414.1 million. Futures and OTC revenue rose 18.4% on record interest rate futures volumes, and cash market trading revenue rose 24.2% as on-market value traded increased 22.5%. ASX's share of on-market cash trading held at 88%. Technology and Data revenue rose 8% to $297.6 million. Listings revenue rose a modest 3.5% to $215.2 million because initial listing fees are recognized over five years, but activity was stronger, with 100 new listings and $32.6 billion of quoted market capitalization, up 85.5%. Austraclear revenue rose 15.8% on spot issuance of $3.3 trillion.
Early FY27 trends are supportive. July on-market value traded rose 12% and futures and options on futures volumes rose 20%. Net new capital in July was $8.4 billion, including the FDC Consolidated Holdings IPO of more than $400 million, the largest of calendar 2026. Management called the FY27 listings pipeline the strongest in several years and increasingly weighted to larger transactions, citing Glencore's plan to list later this year. Because of revenue recognition timing, stronger listings will lift reported revenue only gradually.
There are headwinds below the revenue line. Net interest income fell 15.7%, with lease interest on the new Sydney headquarters, a lower RBA cash rate and lower average collateral balances of $11.9 billion all weighing. The investment spread was stable at 16 basis points and is expected to stay there through the first half of FY27. Sympli, which lost $8.3 million at the operating level in FY26, has been sold for a nominal amount.
Capex, CHESS timeline and new product bets
Capital expenditure was $179.6 million in FY26, with CHESS about half. Guidance is $180 million to $200 million for FY27 and $170 million to $190 million for FY28, with management noting delivery risk. CHESS Release 1 went live in April on time and within guidance. Release 2 has received two of five code drops in industry testing, with the primary build targeted for the end of calendar 2027 and go-live in 2029. CHESS will be amortized over 10 years, so the D&A burden will persist well into the next decade. The futures clearing system replacement has entered testing.
On growth, ASX will build a digital issuer platform and has received regulatory approval to support US dollar-denominated securities in Austraclear, with launch planned for FY27. It will also make initial investments in tokenizing Austraclear bonds, which management said could enable near real-time, 24/7 collateral movements. Asked about the age of Austraclear's technology, Yip said it is "absolutely a focus" and is covered in the capex plan through FY28.
Leadership transition
Anthony Attia, who has global exchange experience in Europe and the United States, becomes Managing Director and CEO next month, replacing interim CEO Yip. He inherits a business with strong volume momentum, a reset remediation program and a cost base growing at roughly 20% a year. The ROE target and the unquantified efficiency levers are the main benchmarks for his early tenure.