ASX Limited's Regulatory Reckoning May Finally Be Behind It

A CEO departure and a surprisingly large cost downgrade marked the depths of a multi-year reset, before a lighter-than-feared ASIC settlement and a strong result turned the tide.

12 Oct 2026 · 3 min read

ASX Limited fell as much as 24 percent and lost its chief executive through 2026 amid unresolved regulatory issues, culminating in a surprisingly large FY27 cost downgrade of 18 to 29 percent, before a much smaller than feared ASIC settlement and a strong August result suggested the worst of the multi-year reset was finally behind it.

A regulatory reckoning claims the CEO

Alliance Bernstein rated the stock a sell, saying it could see the attraction but believes the stock's fall and the chief executive's departure both trace back to ongoing regulatory issues and the regulator's dissatisfaction with how ASX was handling them, leaving unresolved issues by definition. Paradice Investment Management took the opposite view, rating it a buy while acknowledging the regulatory issues have put the company through the wringer on costs and capital, arguing clear air is now on the horizon given the cost envelope has been agreed with regulators even as a CEO transition proceeds. Cyan Investment Management said ASX was one of the worst performers on the market, down 24 percent, as rising technology spending and regulatory issues plagued the operator, once a highly prized regulated monopoly now trading at decade-plus lows alongside a lengthening list of fallen ASX technology stocks. Ten Cap said its short position contributed positively as ongoing remediation costs and a technology modernisation program weighed on the earnings outlook, with further downside risk to consensus.

What was once a highly prized regulated monopoly has now joined a lengthening list of fallen ASX tech stocks now trading at decade or longer lows.

— Cyan Investment Management, Newsletter, May 2026

A surprisingly large cost reset

Pendal Group said the stock fell 22.3 percent after ASX issued a surprisingly large FY27 cost downgrade, with headline costs set to rise 18 to 21 percent off an already elevated FY26 base that included one-off regulatory spending, and underlying costs rising 26 to 29 percent as the company cited its response to regulatory remediation. The rebasing followed the previous CEO's departure and the announcement of a replacement due to start in September.

A settlement smaller than feared, and short sellers close out

Pendal Group said the stock rose 5.7 percent after ASX settled ASIC's court case over misleading comments for $20.5 million plus $3 million toward ASIC's legal costs, considerably less than the bear scenarios that had circulated when the action was first brought, a result Pendal said could signal the regulator easing off following the CEO's departure and the cost rebase. Bennelong Australian Equity Partners closed its short position, calling ASX a successful long-term short following years of operational issues, ASIC inquiries, leadership changes and multiple earnings downgrades, but now believing market expectations have largely reset and the original investment thesis has substantially played out. Alliance Bernstein initiated a new position as the cost outlook became clearer.

Following several years of operational issues, ASIC inquiries, leadership changes and multiple earnings downgrades, we believe market expectations have now largely reset and the original investment thesis has substantially played out.

— Bennelong Australian Equity Partners, Monthly Report, June 2026

August confirms the turn

Pendal Group said the stock rose 1.2 percent after beating the previously downgraded second-half net profit consensus by 2 percent, with strong revenues partly offset by lower interest income. Management expressed confidence in the revenue environment, citing the best listings pipeline in years, resurgent equity turnover, and fixed income derivatives continuing to grow 20 percent after the balance date, prompting a further 2 percent of consensus upgrades with no additional cost rebasing.

What fund managers say they are watching next is how the new chief executive, starting in September, settles in, whether the FY27 cost reset proves the final step in the multi-year remediation process, continued momentum in listings, equity turnover and fixed income derivatives, and whether regulatory scrutiny genuinely eases as several managers now believe.