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ASX’s profit plummets on CHESS derecognition charge

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By Reporter
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1 minute read

The market operator has released its half-year results and provided an update on the troubled CHESS replacement project.

ASX has reported a statutory profit after tax of $73.6 million for the first half of the 2023 financial year, a 70.6 per cent fall on the same period a year ago, impacted by the CHESS derecognition charge of $176.3 million announced by the market operator last year.

In its half-year results released on Thursday, ASX said that it had delivered “resilient financial performance” driven by steady operating revenue of $499.5 million (-0.4 per cent). Underlying net profit after tax of $250 million was broadly in line with the previous period (-0.1 per cent).

“This is a pleasing performance, and it was achieved in a period of notable change for our organisation and volatility in our external environment,” said ASX managing director and chief executive officer Helen Lofthouse.

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Listings revenue lifted 5.4 per cent to $109.7 million while revenue from ASX’s technology and data division was up 8.3 per cent to $117.5 million. 

ASX said that it had also benefitted from a strong rise in net interest income. This was reported to have been offset by a 2.2 per cent decline in markets to $138.8 million and a 9.1 per cent fall in revenue in its securities and payments business to $133.5 million.

Meanwhile, the market operator’s total expenses were 6.8 per cent higher, driven by additional resource commitments to technology, risk management, and customer activities, which were partially offset by a lower depreciation charge.

“It’s been a busy and challenging period, but also invigorating as I feel good progress has been achieved in that time. We’ve reshaped the leadership team, there’s been notable board renewal, we’ve set a fresh purpose for the organisation and we’re working on our new five-year strategy which we will share in June,” Ms Lofthouse said.

ASX noted that it has maintained its 90 per cent payout ratio of underlying NPAT and declared an interim dividend payment of 116.2 cent per share, payable on 29 March.

CHESS replacement project update

Ms Lofthouse also provided an “extensive update” regarding ASX’s CHESS replacement project. The Australian and Securities Investments Commission (ASIC) and the Reserve Bank instructed the market operator to improve its program delivery capabilities and bring the CHESS replacement project back on track last November.

“Part of resetting our approach has been a more intensive focus on listening. We understand that when we paused the project last November to revisit solution design, it signalled that we would need industry engagement for longer than had been anticipated,” said Ms Lofthouse.

“In recognition of this, we have established the CHESS Replacement Partnership Program, which acknowledges that it will take the combined efforts of many stakeholders to achieve the best outcome for the market.”

ASX indicated that the CHESS Replacement Partnership Program, whose total cost has been capped at $70 million, has two components. 

“The first component recognises our direct customers by providing rebates to participants for their clearing and settlement fees,” the market operator explained.

“The second component aims to foster a closer working relationship with eligible stakeholders building to the platform by providing incentive payments. The incentive payments will be dependent on the final solution design, as that will determine how much fresh work will be undertaken and will also be linked to the achievement of project milestones.”

ASX also flagged that approximately $25 million of the cost of the program is expected to be incurred in the second half of the 2023 financial year.

“When it comes to CHESS replacement, we know this is a once-in-a-generation reset of this technology and it’s important that we get it right,” Ms Lofthouse concluded.

ASX’s profit plummets on CHESS derecognition charge

The market operator has released its half-year results and provided an update on the troubled CHESS replacement project.

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