ASX Ltd Faces Share Plunge Amid Warning of Soaring 2027 Tech Upgrade Costs
ASX Shares Plunge Over 13% Amidst Rising Technology Upgrade Costs
By Rajasik Mukherjee and Kumar Tanishk
May 26 (Reuters) – In a dramatic turn of events, shares of ASX Ltd, the Australian stock exchange operator, plummeted more than 13% on Tuesday, marking its worst trading day in over 20 years. The sharp decline follows the company’s announcement of a significant increase in spending for technology upgrades and new product developments projected for 2027.
The anticipated rise in investment comes on the heels of ASX’s costly endeavors with its CHESS clearing platform, which has faced multiple outages and a recently scrapped overhaul. Adding to the turmoil, ratings agency S&P has downgraded the firm, further unsettling investors.
“The market is still scarred from the original CHESS failure,” noted Greg Smith, an investment specialist with New Zealand-based wealth manager Generate KiwiSaver. The CHESS project, which aimed to modernize the clearing and settlement software using blockchain-like technology, was abandoned in 2022 after ASX invested hundreds of millions over six years, leaving market players, regulators, and the central bank frustrated.
Smith emphasized the gravity of the situation, stating, “The failed CHESS replacement damaged credibility badly, so now it’s less about strategy slides and more about whether management can actually execute without more delays, outages, or cost blowouts.”
ASX shares closed at A$51.03, down 13.2%, making it the biggest loser on the benchmark ASX200 index, which itself ended 0.4% lower. The company revealed that total expenses in 2027 are expected to rise by up to 21% from the previous year, with capital expenditure projected to increase to between A$180 million and A$200 million, up from earlier guidance of A$160 million to A$180 million. For 2028, capital expenditure is forecasted to be between A$170 million and A$190 million.
The rising costs are attributed to ASX’s commitment to upgrading technology, investing in artificial intelligence, enhancing internal systems and automation, and meeting regulatory requirements—all while managing the complexities of running both older and newer systems simultaneously.
A recent report from Australia’s securities watchdog highlighted a series of blunders, cost overruns, and missed deadlines in ASX’s technology upgrades. The findings indicated that the company had prioritized short-term shareholder returns over long-term solutions, opting for tactical fixes rather than addressing the root causes of its challenges.
“Regulators have basically said the issue wasn’t just the technology – it was governance, culture, and decision-making. Costs are climbing sharply, and investors will only tolerate that if reliability clearly improves,” Smith added.
ASX’s forecast for total expense growth in 2026, which could reach up to 23%, includes costs associated with the ongoing regulatory inquiry.
As the market digests these developments, the future of ASX remains uncertain, with investors keenly watching for signs of improved reliability and execution from the beleaguered exchange operator.
($1 = 1.3957 Australian dollars)
(Reporting by Rajasik Mukherjee and Kumar Tanishk in Bengaluru; Editing by Subhranshu Sahu)