Australia’s bourse operator, ASX, announced on Monday that it will reduce its dividend payout ratio to 75-85 percent of underlying net profit after tax following an extra A$150 million ($99.59 million) capital charge imposed by the Australian corporate regulator.
The main stock exchange organizer in the country has indicated that the payout ratio will also be positioned at the bottom end of the revised range at least in the next three dividends, and that it will run a discounted dividend reinvestment plan over the same time.
The Australian Securities and Investments Commission (ASIC) on Monday imposed an extra capital charge of A$150 million on ASX following a probe that was initiated in June after decades of strains over a failed software upgrade and recurring trade-processing glitches.
In another announcement, ASIC indicated that a review panel, following approximately 140 stakeholder interviews, found that the emphasis of the ASX on short-term profits and shareholder returns had compromised its responsibility to operate essential market infrastructure.
The regulator will also reestablish the Accelerate programme of ASX, with new operational risk and performance targets agreed with ASIC and the Reserve Bank of Australia.
The regulator said in a statement that the ASIC and the RBA will increase their review to boost their combined supervisory model.
The bourse operator also raised the concern that the raised regulatory capital requirement will affect the underlying return on equity when it reduced its medium-term target range between 12.5 percent and 14.0 percent.
ASX Chair David Clarke said that “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.”
Australian Treasurer Jim Chalmers added that “This is an agreement between ASIC and the ASX, but from the government’s point of view, it’s very welcome.”
He further added that “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.”
ASX shares were falling up to 5.1 percent or A$54, reaching their lowest point in three levels since October 20, 2023.
