ASX Overhauls Governance Framework Amid ASIC Tax Profile Inquiry, Cuts Dividend Payout by 5%

gas_fee_therapist · 2025-12-26T01:06:13+00:00

ASIC has announced significant changes for ASX Limited, including a capital charge and reduced dividend payouts. A joint supervisory model will enhance governance, while an updated Accelerate Program will align with ASIC's recommendations. Financial guidance anticipates reduced returns and increased expenses.

gas_fee_therapist

2025-12-26 01:06:13

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The Australian Securities and Investments Commission (ASIC) has signaled major structural changes ahead for ASX Limited following a comprehensive tax profile inquiry and regulatory review. The exchange has committed to a sweeping package of reforms, including a A$150 million capital charge that will materially reshape its financial policy over the next two years.

Dividend Cuts and Capital Accumulation Timeline

ASX’s dividend policy faces immediate pressure. The exchange has reduced its payout ratio guidance from 80%-90% of underlying net profit after tax to 75%-85%, effectively cutting dividends by approximately 5 percentage points. Management expects the actual payout ratio to sit at the lower end of this new range for at least three consecutive dividend cycles. Additionally, a discounted dividend reinvestment plan will be deployed to support capital accumulation. These measures are designed to funnel cash toward the ASIC-mandated capital buffer, which must be fully accumulated by 30 June 2027.

Structural Governance Reforms

Beyond financial constraints, ASX faces a significant governance overhaul. The Reserve Bank of Australia (RBA) and ASIC will adopt a joint supervisory model, replacing the previous single-regulator approach. More dramatically, the boards of ASX Clear, ASX Settlement, ASX Clear (Futures), and Austraclear will transition to independent, non-ASX Limited directors through an orderly succession process. These changes will be facilitated by enhanced group support and shared services infrastructure.

Strategic Reset of Core Operations

The Accelerate Program, originally focused on remediation initiatives, will undergo a comprehensive strategic reset by 1 July 2026. Its expanded mandate now encompasses operational risk management, cultural transformation, and resilience building—all aligned with ASIC recommendations. ASX has welcomed this collaborative approach, emphasizing that the reformed regulatory framework will be essential for finalizing the updated Accelerate Program blueprint.

Financial Guidance and Investment Outlook

The increased capital requirement will compress ASX’s medium-term return on equity targets. The exchange has adjusted guidance to 12.5%-14.0%, down from the previous 13.0%-14.5% range. For fiscal 2026, total expense growth is projected between 14%-19% relative to fiscal 2025, including A$25 million to A$35 million in direct ASIC Inquiry-related costs. Core business expenses are expected at the upper end of the 8%-11% range. Capital expenditure guidance remains stable, projected at A$170 million to A$180 million for fiscal 2026, declining as the exchange’s technology modernization program advances.

ASIC’s final report is expected by 31 March 2026, and the full implementation timeline for governance and operational reforms will extend through mid-2026.

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