The Australian Securities Exchange (ASX) over the past few years has been expanding its business without providing the infrastructure of publicly listed companies, focusing on technological acquisitions.
Exchange chief Dominic Stevens on Thursday thanked the diversified business for a strong start to the 2021 financial year.
Profits after tax for six months to 31 December 2020 amounted to AU $ 242 million. While this was an AU $ 8.6 million decline from the same period last year, Stevens said the result leaves the ASX well positioned to deliver “strong wages and profits, while investing in future growth and innovation”.
Operating revenue increased AU $ 15.6 million in the past equivalent to AU $ 470.5 million – this has shown significant growth in the stock exchange trading, liquidation, and settlement businesses. It has removed the reduction in revenue from the ASX business, Stevens said.
Pre-interest rates and taxes had increased by AU $ 4 million to AU $ 319 million.
Total expenditure increased by AU $ 11.6 million to AU $ 151.4 million and expenditures reimbursed AU $ 54.5 million, which was largely calculated under “long-term technical and operational changes”. The exchange expects the figure to reach AU $ 110-AU $ 115 million by the end of the year.
“In the meantime, we have continued to develop our multi-year technology investment plan, which will reduce the age of our technology stack from 11 years in 2019 to four years by 2023,” explained Stevens.
This includes a replacement project for CHESS.
ASX has been building the first blockchain land use case – a new post-trade solution to replace its legacy Clearing House Electronic Subregister System (CHESS), which has been in operation for almost 25 years.
Stevens last February said the system would be ready for industrial testing by next July and that full operation could arrive by April 2021. However, in March 2020, ASX announced it was reviewing the CHESS replacement timetable and would consult with CHESS Users as a result of the COVID- 19.
ASX in June said it would review its target date for April 2022.
The target was for October to be updated to April 2023.
Stevens on Thursday confirmed that the date has not changed.
See also: Here’s what you can expect from ASX’s blockchain-based CHESS
“In the recently completed phase, ASX has also completed retaliation and – most importantly – re-exploiting the result of the repetition of the CHESS function,” he said. “As well as addressing the need for more time to complete preparatory activities.”
Stevens said the exchange is committed to developing an ASX technology stack. He said the technology reflection program was an investment in its core businesses while providing additional opportunities in the future.
“There are many industries, markets, and technologies that ASX can use to increase its value over the next decade,” he said.
“In all industries, but especially in financial services, we are seeing a burst of data, digital processes, focusing on efficiency and risk management, and the economic growth of financial services, driven by our mandatory personnel management system.”
In November, the exchange encountered “software problems” when it started live with the upgrade of its ASX Trade equity platform.
“This incident is one of the great strides we have made in strengthening our Building Stronger Foundations program over the years,” the chief executive said on Thursday, adding another apology.
“Over the past four years, customer-centered technology and ASX operational events have dropped by about 78%.
“Most importantly, the reduction of incidents was achieved during a critical technology transformation program in ASX, and where the size and breadth of what we are doing enhances the track record of our technology.
“Over time, the development and introduction of new technologies is undoubtedly a great way to reduce long-term risk, bring value to the market and strengthen the ASX franchise. However, in the short term, all technological changes have some risk after significant deployment.”
He said, however, that the exchange was “similar to a recent operation”.
“And as our 2016 actions have reduced the incidence and the end, I am confident that what we learned from last year’s events will reduce our risk even further,” he added.
Stevens said that by 2020, the first public offering market came back strong, with one of the busiest three months ever seen in the ASX, with a list of 82 new and AU $ 52 billion in revenue.
“The pipelines remain strong and it will be exciting to see what it brings to the second half of the financial year,” he added.
“Apart from the low total volume in the session, the team has worked hard on product launch and development.”