Exchange operator ASX sinks most in more than a decade on tech-driven cost surge

Australian stock exchange operator ASX announced on May 26 that its total expenses will rise by up to 21% in 2027 due to increased spending on technology upgrades, artificial intelligence, and system automation. The company raised its capital expenditure forecast for 2027 to A$180 million–A$200 million ($128.97 million–$143.30 million), up from A$160 million–A$180 million, with similar projections for 2028 at A$170 million–A$190 million. The cost surge stems from upgrading technology, running both older and newer systems simultaneously, and meeting regulatory demands. Australia’s securities regulator, the Australian Securities and Investments Commission (ASIC), previously identified underinvestment, missed deadlines, and cost overruns in a report, criticizing ASX for prioritizing short-term shareholder returns over long-term fixes. ASX acknowledged historical underinvestment compared to global peers and committed to accelerating upgrades. The company’s shares dropped as much as 12.6% to A$51.40, their worst intraday performance since August 2012, contrasting with a 0.4% decline in the broader ASX200 index. Despite the expense hike, ASX maintained its dividend payout ratio at 75%-85% of underlying net profit after tax. Revenue for the 10 months ending April 30 grew 12.5% to A$1.03 billion, though the expense increase includes costs related to the ASIC inquiry. The company’s warning highlights ongoing challenges in balancing regulatory compliance, technological modernization, and shareholder expectations amid rising operational costs.