Dec 15 (Reuters) – Australia’s bourse operator ASX said on Monday that it will cut its dividend payout ratio to 75–85% of underlying net profit after tax after the country’s corporate regulator imposed an additional A$150 million ($99.59 million) capital charge.
The country’s main stock exchange operator said the payout ratio is also expected to be at the bottom end of the updated range for at least the next three dividends, while also planning to operate a discounted dividend reinvestment plan over the same period.
The Australian Securities and Investments Commission (ASIC) on Monday imposed an additional capital charge of A$150 million on ASX in response to an inquiry launched in June after years of tensions over a failed software upgrade and repeated trade-processing glitches.
ASIC, in a separate statement, said a review panel, after about 140 stakeholder interviews, found ASX’s focus on short-term profits and shareholder returns had undermined its duty to run vital market infrastructure.
The regulator will also reset ASX’s ‘Accelerate’ programme, setting new operational risk and performance targets agreed with ASIC and the Reserve Bank of Australia.
In addition, ASIC and the RBA will step up their review to uplift their joint supervisory model, the regulator added in a statement.
The bourse operator also flagged that the increased regulatory capital requirement will impact underlying return on equity as it downgraded its medium term target range to between 12.5% and 14.0%.
“While the Panel’s report was challenging reading, our commitment to the strategic actions will provide the reset needed for ASX to ensure we deliver resilient market infrastructure for Australia,” ASX Chair David Clarke said.
“This is an agreement between ASIC and the ASX but from the government’s point of view, it’s very welcome,” said Australian Treasurer Jim Chalmers.
“The report raises very serious issues and the ASX must now act urgently to fix them, consistent with the commitments it has given to the regulators.”
Shares of ASX were down as much as 5.1% at A$54, as of 2318 GMT, hitting their lowest level since October 20, 2023.
($1 = 1.5063 Australian dollars)
(Reporting by Shivangi Lahiri in Bengaluru and Renju Jose in Sydney; Editing by Chris Reese and Sherry Jacob-Phillips)
