ASX Ltd's Regulatory Reckoning Finally Finds a Floor

Fund managers say years of technology failures and ASIC penalties may be nearing resolution after a smaller-than-feared settlement

30 Jun 2026 · 5 min read

A once highly prized regulated monopoly, ASX Ltd fell to decade-long lows through 2025 and 2026 as ASIC penalties, a CEO departure and repeated cost blowouts unwound years of investor confidence, before a smaller-than-feared court settlement offered signs the worst may be over.

A monopoly weighed down by technology failures

Akambo's November 2025 update pointed to the root of the problem: ASX's decades-old CHESS settlement system replacement had been plagued by constant delays and cost overruns, with the stock down from around $60 in mid-2024 to $57.48. Alliance Bernstein exited its position in September 2025 as regulatory risks increased, a decision that looked well-timed when Ten Cap's December 2025 update reported ASIC had hit the company with a $150 million capital charge, forcing ASX to slash its dividend payout ratio and medium-term return on equity target range.

As the wider market capitulated, our short position in ASX contributed to fund performance, as ASIC hit the company with a $150m capital charge. ASX's share price plummeted as they were forced to slash its dividend payout ratio and medium-term ROE target range. This will remain an overhang until the ASX's remediation actions are completed and Accelerate Program becomes clear.

— Ten Cap, Monthly Report, December 2025

Cost guidance keeps deteriorating

Pendal Group's February 2026 update tracked the escalating cost picture: guidance that had started at 4 to 7 per cent operating expense growth climbed to a total cost growth range of 20 to 23 per cent once one-off ASIC costs and the company's initial response to the regulator's interim report were included. Even so, strong trading activity provided some offset, with Pendal's January update noting derivative volumes exceeding pre-COVID levels for the first time at a quarter end, and March activity setting a record with 12, later extended to 14, consecutive days of more than 1 million contracts traded.

A patient value case amid the cost pressure

Auscap Asset Management's March 2026 view took a watching-brief stance, seeing ASX as a great monopoly asset under tough cost pressure but with potential for long-term earnings growth as valuations pulled back. Equity Trustees Asset Management bought into the fund the same month, acknowledging the company's history of excessive cost and capex growth but seeing a market-clearing opportunity emerging.

A CEO departure and a steep FY27 downgrade

Alliance Bernstein rated the stock a sell in May 2026, tying the CEO's exit directly to unresolved regulatory dissatisfaction with how the company had handled its issues. Cyan Investment Management's May update captured the scale of the damage: shares down 24 per cent that month alone, describing ASX as having joined a lengthening list of fallen ASX tech stocks now trading at decade or longer lows. Pendal Group's June 2026 update confirmed a surprisingly large FY27 downgrade, with headline costs set to rise 18 to 21 per cent off an already elevated FY26 base, or 26 to 29 per cent in underlying terms, following the CEO's departure and the announcement of a replacement due to start in September.

ASX issued a surprisingly large downgrade to FY27, driven by costs which will increase 18-21% in headline terms, off an elevated FY26 base that included one-off regulatory spend. This rebasing comes after the departure of the previous CEO and announcement of a replacement to start in September.

— Pendal Group, Newsletter, June 2026

A settlement smaller than feared shifts sentiment

The turning point arrived later in June 2026: Pendal Group reported ASX settled ASIC's court case over misleading comments for $20.5 million plus $3 million toward the regulator's legal costs, considerably less than the bear-case scenarios that had circulated when the action began, a result Pendal suggested could signal the regulator was easing off following the CEO's departure and a cost rebase. Bennelong Australian Equity Partners closed its long-running short position that same month, judging that years of operational issues, ASIC inquiries, leadership changes and earnings downgrades had substantially played out and reset market expectations, while Alliance Bernstein reversed course entirely, initiating a new long position as the cost outlook became clearer.