ASX Limited (ASX) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the ASX Investor Day. My name is Helen Lofthouse, and I'm the Managing Director and CEO of ASX. So before we begin, I'd like to acknowledge the traditional owners of the land on which we're meeting today, the Gadigal people of the Eora Nation. I'd like to pay my respects to their elders past and present and recognize the importance of our First Nations people. So this is the first time ASX is holding an Investor Day, and I'm delighted to have the opportunity to share how we've been thinking about our business and how to ensure that it continues to deliver long-term sustainable value. The first part of the day aims to give you a group-wide view of ASX. I'll speak about our priorities and step you through our 5-year strategy. Tim Whiteley, who first joined ASX to lead our CHESS replacement solution design and who soon to be our new Chief Information Officer, will deliver an update about CHESS replacements, and we'll also provide a deeper view on technology modernization and how we'll continue to deliver this. The final speaker in this group-wide view is our Chief Financial Officer, Andrew Tobin, who many of you will know. Andrew will give you a financial update and step through our capital management settings. After a short break, we'll have a chance to hear from the leaders of several of our lines of business. Dan Chesterman, Darren Yip and Blair Beaton will each provide a deep dive on their respective areas and to give you a clearer understanding of some of the key drivers behind these businesses. There will be time for questions once the presentations are complete, both for those in the room and for those attending remotely. Earlier this year, at our half year results, I talked about the significant resets underway across our organization. We've had renewal at the Board level with 4 new nonexecutive directors having joined since March last year. And as you know, I've now been in the CEO chair for about 10 months. These changes are allowing us to take a fresh lens to ASX and I'm delighted to have such a dedicated and talented team supporting me today. I wanted to take a moment to call this out. And shortly, you'll hear me talk about our strategy. But I think it is worth remembering that it's the capable and committed people in the organization that live our purpose and deliver on our strategic vision. What I want to do this morning is unpack the thinking that we've done on our priorities and our strategy. At our first half financial results in February, I spoke about ASX being in a reset phase, and we are doing things differently. We've since developed our 5-year strategy, and we've made some significant decisions on our priorities and financial settings to ensure that we can deliver on a growth agenda built on solid ground. So what we're here today? I want to set some signposts shown on all the slides to show you how we'll take you through our thinking. And the best place to start is where we are today. And as I stand here, there are already many positive and attractive things about ASX' business and market position. I want to remind us all why we have a strong core business and describe the strengths which set us apart. Next, I'll talk about how this plays into our opportunity. We have some attractive and interesting macro trends that present opportunities to us. And it's worth remembering why we're on the right side of this wave. While the opportunities highlight our tailwinds, we also recognize that there are some headwinds that we face. And I'm going to explain why these are our focus in the near term. The best way to navigate our near-term focus areas is with an understanding of where we're headed. And what will guide our decisions over the next period is the work that we've done to define our 5-year strategy. I'm pleased to be sharing our new purpose, vision and strategic pillars. And you'll also get a sense of what's informing the path ahead as we look at our target outcomes for FY '28, and some of the metrics we'll use to measure how we're tracking. In the penultimate section of my presentation today, I'll talk about what will it take to get us where we're headed. I'll step you through the 2 horizons of our strategy and some of the key enablers to make this happen. And finally, the key takeaway from me today is to make sure you understand that this isn't a plan for a plan. We're taking immediate actions. We're making good progress on the things we need to do to build an operationally resilient, long-term sustainable business. We've been transparent about what we need to do and thoughtful in how we're planning for the future. And we'll be cleared, [ right ] and focused. And I want to give you confidence by showing we're already taking important actions. So first, a recap on where we are today. We have a strong core business and one of our key strengths is the diversification of our 4 lines of business, which have delivered resilient financial performance through changing business cycles. In our business today, we'll focus on Australian and New Zealand markets, but we deliver that to a global customer base. We're leaders in this region, and it's a privileged and valuable position. We understand it's important to know where our strengths lie and to focus our efforts on opportunities that draw on those strengths. We understand the strengths which differentiate us and underpin long-term value in our business. And these are what sets us apart and represent value that's not easy to replicate. We have unmatched connectivity across multiple markets. We bring global customers together in fair, transparent markets, which provide deep liquidity and access to a range of data products and services. As a regional champion, we have a strong sense of our storied 150-year history, and we're here for the long haul, bringing deep local expertise and relationships. We often talk about the value of our licenses, and they are indeed a key asset. But it's worth emphasizing that we hold multiple licenses, and it takes real expertise and deep experience to do this well. And this is, of course, a testament to our people who understand that what we do matters and who'd work hard to deliver great outcomes for our customers and for the market as a whole. And when it comes to our expertise in operating markets, we do have deep experience in regulated environments. We have 2 market licenses and 4 clearing and settlement licenses. And we also hold a benchmark administrator license that allows us to administer the bank bill swap rate. And when we look at these key differentiators, it's a fantastic starting point for any business, and it's ultimately a privileged position for us to occupy. What it also highlights is that we're well positioned when we look at some of the major macro trends that I describe as tailwinds for ASX. As the leading domestic capital market with 89% on market share of the cash equities market, ASX is well positioned to capitalize on Australia's large and fast-growing pool of superannuation funds. And Australia is also home to a growing pool of retail investors who are keen to educate themselves and invest in the future. In fact, there's never been a time when more Australians have been invested in the share market and we know that from our Australian investor study, which is a significant ASX commission survey that we conduct every 2 years. We're releasing the study later this month, but I'll give you a sneak peak of some of the findings today. And what we've learned is that 10.2 million adults or 51% of the adult population now own investments outside of superannuation or the family home, and that's up 46% from early 2020. And this increased interest is being driven by younger Australians aged between 18 and 24. And about 60% of these new investors started their investing journey just in the past 2 years. So these factors are part of what continues to make ASX an attractive listing venue globally. And you'll hear Blair Beaton talk more about that later today. When it comes to data, we're certainly a data-rich environment and there's further value to be unlocked from this. We're exploring this thoughtfully, and we understand that as custodians of an extensive amount of data the opportunities in finding new capabilities and new products that can leverage this appropriately for our customers and for the market. And Dan Chesterman will talk more about our data opportunity a bit later. Policy decisions made by the Australian government on decarbonization present many opportunities and challenges for the Australian economy. And ASX has an important role to play in enabling markets to support this transition. For example, our electricity futures market has seen significant growth over several years with a changing generation mix and new entrants, and there's an opportunity to play a key role in Australia's carbon market. So with a great core business and some interesting opportunities ahead. The key for ASX is to ensure we put in place great fundamentals to support us in realizing our full potential. We're on the right side of this wave of opportunity. But even with these tailwinds, we do need to be honest about the headwinds that we face that create near-term challenges for us. And that's what's informing our immediate focus and I'll expand on this in the following 2 slides. So the first of our near-term focus areas is the work we're doing to build confidence with our customers, our regulators and policymakers. There's a lot of detail on this slide, and you certainly don't need to read it all. My aim here is to give you an overview of our key regulatory and related commitments and our progress through them. We understand and acknowledge that the decision to pause CHESS replacement has been disappointing, and we need to ensure that we're taking the right steps to give confidence to our stakeholders. To date, ASIC have asked ASX to produce 3 special reports. The first of these was released yesterday, and it relates to the work that we're doing to extend the support and maintenance of current CHESS. The report was prepared by ASX and EY provided an audit of the report. The report is comprehensive and it's allowed ASX to conclude that our existing governance investments and management arrangements for CHESS are commensurate with our role in providing critical financial market infrastructure. The report is transparent about the investments and the risk management that's required to ensure CHESS remains operationally resilient and supportable into the future. And we've clearly detailed the program of work already underway to invest in an enhanced CHESS to support the long-term interest of Australia's financial markets and to ensure that we'll meet -- continue to meet applicable regulatory requirements. The regulatory responses we're preparing are in themselves significant pieces of work. We have 2 more special reports to provide to ASIC, and we're also undertaking a review of our conflict management arrangements. ASX has in place a structured and robust framework for the identification and management of conflicts of interest. We've engaged an expert law firm to carry out a review of ASX' arrangements to identify and manage potential conflicts between the commercial interest of ASX Group and the license obligations of ASX Clear and ASX settlement. And that review is focused on conflict management as it relates to CHESS and CHESS replacements, and it was a request set out in the RBA's letter of expectations issued last December. We've committed to making the results of that review publicly available, and I expect we'll be in a position to release this in July. We'll also be publishing a CHESS governance statements and this document will provide further education and transparency to stakeholders to help them understand the role and responsibilities of the various different ASX governance forums in relation to CHESS and CHESS replacement. And we also expect to release that in July. In late March, ASIC also informed ASX that it had commenced an investigation into oversight and statements and disclosures regarding the test replacement project. We're taking the investigation very seriously, and we've been fully cooperating with ASIC. The regulatory scrutiny of ASX is appropriate given the special position we hold in the economy and the fact that we operate critical market infrastructure. We continue to work cooperatively with our regulators and will take all necessary steps to be transparent to engage meaningfully with stakeholders and to rebuild confidence and restore trust. Our second area of focus is technology modernization and you'll be familiar with this slide, as we've previously shown it as our FY '22 results briefing. And what it tells you is that we've been looking closely at our technology assets, and we understand the need to address our legacy technology systems. Over the past 5 years, ASX has prioritized CHESS and certain other systems. And while this was taking place, we were also continuing a steady program of maintenance and upgrades across all our technology platforms and systems. And during that time, ASX continued to make good progress in delivering an increasing number of system changes while decreasing the number of material technology incidents. But having said that, we do now need to reassess our approach. The pause and reassessment of CHESS replacement means that we now need to undertake the CHESS work, along with other significant pieces of work within our enterprise technology modernization program. And this includes upgrading various parts of our derivatives platform and trading networks. This additional load comes at a time when there are also key external drivers such as increasing investment requirements for customer experience and cybersecurity to ensure that we're delivering future-fit technology. Our approach now has to be a significant uplift in investment in both capability and platforms. This multiyear approach will be expanded upon by Tim Whiteley, to give you an understanding of what's involved and why we need to make this investment to secure the foundations for ASX to deliver on our potential. So you've heard me outline the focus on our regulatory responses and technology modernization and these will be important streams of work. But I want to put them in the context of our strategic framework. We've developed a 5-year strategy, and this will be key to help us navigate our path forward and ensure that we can realize our full potential. And on this slide, we have our purpose, our new vision statement and the 4 strategic pillars that will be our guiding principles across ASX. And first, as you can see, our purposes to power a stronger economic future by enabling a fair and dynamic marketplace for all. And I'd like to highlight what some of those words mean to us. Power, because effective markets are a powerful lever for economic growth and prosperity. Stronger economic future, we're an interconnector through markets, technology and relationships and we provide resilient market infrastructure to power the Australian and New Zealand economies. Fair, we enable a level playing field and ensure that all different types of customers can interact within clear and consistent frameworks. And our role in engaging the market to develop and set standards is important as is our role in enforcing those standards fairly and consistently. Dynamic marketplace, we must evolve with our various different markets to stay relevant, both anticipating and responding to customers' needs. And [ thrall ], we keep our ecosystem impact on our license to operate front of mind. Our aim is to deliver the best outcomes for the market as a whole, and we work with the various different customers that make up our markets to achieve that. So we're inclusive across the market and our broader community. Let's turn to our vision next. This vision speaks to our aspiration. ASX is in a new era, we're the market's choice inspiring confidence and trust. We'll be the region's #1 choice across all our markets and services. We'll inspire confidence with our regulators in the Australian and New Zealand markets and with our global customers. We'll be easy to do business with, digital and more connected than ever before. Our organization will be built on contemporary foundations, and we will be an employer of choice. We've identified 4 strategic pillars that will be the guiding principles helping us to achieve this vision. One ASX: our talented and empowered people deliver value to the ecosystem in a deeply interconnected way. Great fundamentals: our core businesses are uniquely important to the region and a privilege to operate. We run them with operational resilience and restore trust and confidence. Customer-driven: we're dedicated to deeply listening to and working with our customers to improve our markets, products and services and generate mutual value for all. And digital by design: we're easy to do business with. For each of our strategic pillars, we've detailed what success looks like for us in FY '28 and how we'll measure success. For One ASX, it's about building a contemporary work experience for our people and a vibrant culture. We'll put in place new era ASX values, capabilities and career development. We'll empower our people with clear accountability to deliver great outcomes for our markets and our people. Success will be measured by being the employer brand of choice and having a highly engaged workforce. Running a great business is a necessary precursor to future growth and great fundamentals is all about getting the essentials right, building new era trading, clearing and settlement platforms, including CHESS replacement and building a simplified modern technology stack. At the heart of great fundamentals is ensuring we continue to deliver on our license obligations and have risk compliance and operating frameworks, which are actively maintained at an appropriately high standard. And we'll know we've been successful when these frameworks are regularly benchmarked and our practices consistently meet the target state for critical market infrastructure. Delivering sustainable value for our shareholders will also be a key outcome and we'll continue to track this by focusing on return on equity as a performance metric. Our primary customer is the market and customer-driven growth is centered around this. We'll work effectively in partnership with multiple groups of customers, solving challenges and delivering outcomes. We'll actively measure, monitor and improve market quality to deliver value for the whole market. And success will be measured by consistently high levels of customer satisfaction, which will in turn drive revenue growth. Digital by design for ASX is about making customer and people experiences easy. The underpinning this will be high-quality data and analytics capabilities, which inform our decisions. We're an inherently complex business, and that's okay, but we need to eliminate unnecessary complexity. So fit for purpose automation and digitization will ensure that we keep pace with changing customer and employee expectations. Our success will be reflected in our customer effort score, and a high degree of process automation across our business. Achieving all of this will usher in a new paradigm shift and a new era for ASX. So as we work towards our strategic goals, we think about 2 interlocking horizons. Horizon 1 is a reset, focused on restoring trust and getting great fundamentals in place. Horizon 2 is to embed and grow. When we aim to be able to accelerate our pace uplifting market quality and delivering value to our customers, as well as addressing a wider set of growth opportunities in our region. And in horizon 2, this could include the acquisition of adjacent opportunities and capabilities, should the right opportunities arise. There are a number of strategic enablers that will help us to deliver on this road map across both horizons. The first is our robust risk and regulatory capability. We operate in a highly regulated environment, and we've got the skills, experience and frameworks to do that effectively, along with a focus on continuous improvement as best practice evolves. And this will help us with our near-term focus area, delivering on our regulatory commitments, building stakeholder confidence and restoring trust. The next strategic enabler will be modern, reusable technology platforms. Together with effective data for decision-making and enhanced delivery capabilities. We have a significant program of technology modernization to deliver, but this also presents the opportunity to set up and leverage core technology capabilities, which will help us to speed up the delivery of technology. Our talented people are crucial to everything we do. We have a highly skilled and specialist workforce at ASX with a broad ranging set of deep expertise from software engineers and data scientists, all the way through to risk analysts and the legal professionals supervising our listed markets. And these highly capable people will be delivering on our strategic vision, and we'll be supporting them with the ongoing development of capabilities and career opportunities. And a vibrant culture is essential to enabling them to do that. I think about culture as the way we do things around here and the systems and processes that support us. My focus is initially on providing real clarity on our strategic goals, our priorities and road map so that all of our people are aligned and working towards the same goals. I want to empower our people, enabling them to collaborate with purpose, both together and with our customers to deliver great outcomes for the market. And finally, I'd like to step through some of the actions we've already taken on our strategic priorities and those to come soon. As you now know, our near-term focus areas, our regulatory commitments and technology modernization, both come under our great fundamentals pillar. On technology modernization, we've defined a road map for the ongoing investment and maintenance of the current CHESS platform, ensuring that it continues to support the Australian market effectively for as long as it's needed. We've also put in place a road map for the new CHESS replacement solution design, and we have a prioritized plan for our further technology modernization. In Q4, we plan to announce the new solution design for CHESS replacement and we'll further iterate on our platform modernization plan. In terms of our risk, compliance and operating frameworks, we have a number of new executives in place as you'll see today. There's also been a process of Board renewal with 4 new directors over the past year or so. We've significantly increased our stakeholder engagement in cash market clearing and settlement including the monthly CHESS Replacement Technical Committee and the partnership program. And of course, yesterday, we published our special report on the current CHESS platform, confirming that it's operating to an appropriate standard for critical market infrastructure along with a road map for ongoing support and maintenance. We have 2 further special reports to come this year, one to be released in August on our response to the CHESS replacement external review recommendations and one to be released in November, reporting on our project, program and portfolio management frameworks. In July, we also expect to be publishing the results of our expert review of our conflict management arrangements with respect to CHESS and CHESS replacement prepared by an external law firm and also a CHESS governance statement, which aims to provide more public transparency and clarity on how our governance arrangements work for CHESS and CHESS replacement. And finally, we're focused on ensuring that we deliver sustainable value to our shareholders. In our Information Services business, we're growing sales of data products, developing new products in partnership with our customers and evolving our commercial models to reflect changing patterns of data usage. As you'll have seen from our market announcement a couple of weeks ago, we've entered into a binding agreement to sell our holding of Yieldbroker to Tradeweb, subject to a number of conditions, including regulatory approvals. We expect to continue working closely with Yieldbroker and Tradeweb in a number of areas going forward to foster long-term growth solutions for customers in the Australian fixed-income market. As we have close linkages which are important to both of our businesses. But we also saw this as a good opportunity to realize the value from our investments and to provide ASX with a strong global partner going forward. We've announced an upcoming consultation on mFunds, exploring whether that's still the right service for our customers in light of the rapid growth and attractiveness of exchange-traded products, or whether there's a case for reducing the complexity of the various product formats. Of course, we've developed the 5-year strategy that we've shared with you today, and we've introduced greater flexibility to our capital management framework which Andrew will share with you shortly. Going forward, we'll continue to review the rest of our portfolio of investments, both internal and external, to ensure that they're delivering value. We'll have a number of expense management initiatives and Andrew will talk about this further. And we'll introduce a new focus on return on equity as a core performance measure for our business. Now I'm going to hand over to Tim Whiteley, who will give an update on both CHESS replacements and our plans for technology modernization. Thank you.

Thanks, Helen, and good morning, everyone. Today, I'm going to cover both an update on the CHESS replacement project and on the broader technology capability plan. I'll start with an update on the CHESS replacement solution design. We held a webinar for market participants recently, which provided an up-to-date status on the redesign project. Contrary to some headlines, no firm solution decision has been made. We remain on track to announce the solution design in the last quarter of this calendar year, and we continue to explore all options for the solution design. This work includes consideration of options in 4 areas: Firstly, we are looking at the previous DLT-based solution, and considering ways we can change the existing solution to resolve the issues that were called out in the external report. Second, we are assessing options to build a new solution using conventional technologies in our architectures. We're also investigating the product-based option. For this option, we refreshed our view of the top 20 international exchanges to understand what software products they had in place. Following this, we issued a request for information to appropriate product vendors to review all the options available to us, both locally and internationally. And the fourth area is looking at our current CHESS system and how we could upgrade the existing technology stack and build-out the functionality required for the CHESS replacement scope. In terms of working through this redesign process, the project is tracking activities across 4 streams, all leading to the solution decision. All activities continue to track to their milestone dates. The product stream is focused on business outcomes with agreed business requirements to be finalized in order for estimates, benefits and industry impact to be available for the business case approval process. The solution assessment team are delivering the technical solution comparison and have developed a comprehensive solution decision framework to enable a process to review each of the options, define the opportunities and risks that each provide, so we can compare them and align to a solution which best meets the requirements. But has also has the lowest delivery risk. The sourcing and commercial stream are leading the commercial processes for reviewing product vendors. They're currently supporting the assessment of the vendor proposals. They are also working to select a delivery partner to help derisk the overall project delivery. The testing and implementation stream have engaged both the project team and industry participants to ensure lessons learned from the previous work are taken into the new test strategy and implementation plan that they are delivering. As the slide calls out, the key risk to meeting the solution decision time line is that any protracted commercial processes may impact the timing of our market announcement. Following the solution decision, we will need to consult with the industry to agree the implementation plan and time lines. In a significant effort to engage industry participants more actively in the CHESS replacement project, we established a technical committee. It is made up of 44 member organizations and other parties, including software vendors. The regulatory agencies, ASX is [ Assure ] EY and the industry associations all attend as well. Engagement has been strong with near full attendance at meetings, large numbers of responses for different areas of feedback and multiple attendees per member at the scope workshops that are currently underway. A pulse survey of members in March was complementary of the efforts we had made at that point to engage the industry in the redesign work. The agenda for the committee is focused on a number of key areas. Industry representatives are currently participating in a series of half day workshops to define areas of scope that they would like included or change from the original project scope. These workshops have an independent chair and will present their scope items in order for the technical committee to make a set of recommendations to ASX for changes to the project scope. Detailed work on the design of the process will then be overseen by the committee once a solution has been decided. Implementation and cutover options are also a key area for the agenda, following many requests to consider a move away from a single implementation event. As mentioned, there is also a review of industry testing approach, seeking feedback from previous phase and planning for the next. The committee has a strong focus on project governance, including monthly status reporting, review of program objectives, the solution decision framework and the commercial processes. Given my new role, I'll be sitting in place a new project team structure but will retain accountability for the delivery of the CHESS replacement technical solution. And that's a good transition into a broader discussion around the technology transformation and areas of investment and capability uplift that are required. In August '22, we presented a chart that indicated more investment was required beyond CHESS to continue ASX's technology modernization. We have made good progress on the equities data warehouse but significant priority and investment is required in the trading, derivatives clearing applications and the technology supporting them. This slide also shows that the current operational track record has been good. Systems have been very stable with incidents falling while demand for changes continues to grow. There are increasing technology challenges facing the financial industry generally, increasing volumes and availability expectations across trading markets, digital offerings, and data processing affect pretty much every participant in financial services let alone other industries. Regulatory expectations of resilience measures are also heightened. The same can be said for demand for business change, be it in product innovation, regulatory uplift or process automation. And similarly, technology refresh cycles are accelerating everything from minor security patching through the whole technology project -- product life spans lasting just 2 to 3 years. Without doubt, the fastest-growing threat of cyber, not something we dwell on today, but an area that is ongoing increase in investment that needs to be closely managed. The ASX also has its specific challenges. There's a strong appetite from customers and staff for more digital experiences, driven not just by COVID, but the other digital and data capabilities in other industries. The CHESS replacement project requires -- is also going to require investment for a number of years beyond the original plan. And the trading and derivatives clearing systems are a complex set of applications, infrastructure and network technologies that not only need to be upgraded or refreshed but also need more capability around new products, processes and data to support the market in coming years. Now I'd like to focus on what we'll do to address the business drivers and external factors. That is with a clear technology delivery strategy. This will focus on improving our ability to deal with the current risk-focused investment priorities while improving the capability of the technology environment to support the increasing rate of change. The strategy focused on proven architectures and technologies with strong project planning and delivery capability uplift. And importantly, our large delivery projects are a key driver of our technology modernization and 5-year strategy. By investing in technology platforms, especially data, APIs, cloud and identity, we can significantly reduce the amount of technology variation across our business lines. We'll also leverage the automation that comes from these platforms to improve the speed of implementing change. The ASX has a significant number of business applications. So efficiently managing the underlying technology life cycles is essential for risk mitigation and for meeting market demand. The level of integration and automation of processes across ASX systems and the growing demand for data requires better managed, more efficient access to data and APIs. Our well-managed data and integration capability will also simplify the effort involved in nearly all business and technology-driven projects. And while standardizing and automating our technology will benefit our project delivery, improved portfolio planning, project governance and engineering capability are critical to the success of the strategy. Investment in those capabilities is already underway but also requires further uplift to achieve the level of maturity needed. There's definitely work to do, but I hope you can see that we have a clear view of what is required. Having come into this role recently, I'm able to bring a view of what many other organizations have done. I'm pleased to confirm that much of this feels familiar. What we'll do at ASX shares many of the same characteristics of strategies of financial services companies, especially those that have executed large technology modernizations. We will be delivering our strategy and what our proven architectures and technologies and this positions us well to achieve the outcomes we have set out. Thank you for your time, and I'll now pass over to Andrew Tobin.

Thanks very much, Tim, and good morning, everyone. Firstly, to recap on Helen's introduction today. We have a strong core business, and one of our key strengths is the diversification of our 4 business lines which has delivered resilient financial performance through various business cycles. As can be seen on the top chart on this slide, ASX has a demonstrated track record of continued revenue growth over the past 5 years and we surpassed operating revenue of $1 billion for the first time in 2022. Over this period of time, we've also seen the EBIT margin moderate is we have increased resource levels in response to internal and environmental factors, including increased regulatory and risk management standards and technology changes. Like other companies, we've also seen inflation impact our cost base over the past 12 months. This increased expense base has been appropriate given the critical role that ASX plays in the financial markets. And despite the decline, ASX's EBIT margin continues to benchmark favorably to our global exchange peers. The lower chart also demonstrates a consistent profit profile as measured by underlying net profit after tax and earnings per share. This slide outlines our expense profile in more detail and provides guidance for FY '23 and FY '24. In the first half of 2023, our expense base increased by 6.8% compared to the first half of 2022 and was tracking below the original FY '23 guidance range of 10% to 12%. At our interim results in February, I also indicated that given our ongoing build-out of technology, risk management and customer capabilities as well as assurance and solution design activities in relation to CHESS, we were expecting our second half cost to increase, but that the total expenses will be managed within the original guidance range. This chart illustrates the breakdown of our expected FY '23 expense profile. We are guiding to an expense growth of approximately 12% in FY '23 compared to FY '22, including costs in respect of the CHESS solution design and assurance costs relating to the special report activities that we have undertaken this half. I also wanted to provide an update on the CHESS replacement partnership program that we announced in February. The total cost of this program will be up to $70 million and it will be recognized as a significant item in our financial reporting framework. It consists of $15 million rebate for participants and a development incentive facility of up to $55 million for eligible stakeholders. We now estimate that approximately $35 million of the total program costs will be incurred in the second half of '23, which consists of the [ $15 ] million rebate payments and the initial allocation of approximately $20 million from the development incentive facility to a number of participants, software developers and share registries. This component increased from our initial estimate of $10 million due to the finalization of program criteria, which was adjusted in response to feedback from eligible stakeholders. The balance of the development incentive pool will be incurred over subsequent periods with the time line to be determined by the CHESS project solution design and implementation plan. The expense profile for FY '24 has been informed by the strategic reset that Helen and Tim have outlined this morning. Including increased resource allocation to regulatory, risk, technology and customer activities. We are guiding to an expense growth of 12% to 15%, excluding significant items in FY '24 as outlined on the chart. And this expense growth will also include an element of continued costs in relation to the CHESS solution design and related assurance costs. We recognize that this growth rate is not sustainable into the future. And so during FY '24, we will also initiate a number of expense management reviews to mitigate our recent expense growth, including a review of our workforce mix across consultants, contractors and permanent resources, leverage process simplification and automation and increase our focus on strategic procurement opportunities. We will also undertake a review of our equity investment portfolio to verify the strategic alignment and value proposition of these investments. I expect that these initiatives will lead to a reduction in the expense growth rate in FY '25 compared to our guidance for FY '24. Turning now to capital expenditure. This chart sets out our CapEx profile over the past 6 years and highlights the allocation that has been made to the CHESS replacement program over this time frame. We expect to end FY '23 with a CapEx spend of approximately $95 million. This is below the $100 million to $115 million guidance that we provided to the market in February mainly due to the CHESS discovery phase costs being classified as operating expenses in the second half as outlined on the prior slide. Given our strategic focus on technology modernization and the ongoing need to replace the CHESS system, we're providing guidance of a step-up in expected CapEx for FY '24 to a range of $110 million to $140 million. We are currently focused on increasing our delivery capability, program governance and capacity across the technology and operations teams to support this increased level of activity. We expect capital expenditure to remain around FY '24 levels in the medium term to support the technology modernization road map. Looking now at the capital management settings for ASX. ASX has a long-standing policy of paying a dividend based on a 90% underlying profit. This has been an effective use of operating cash flow by way of returning the vast majority of earnings to shareholders. However, it leaves little flexibility to reinvest free cash flow back into the company. In order to execute the strategy that we've outlined today and to provide confidence that we have appropriate resources to address the regulatory and technology priorities, we have reviewed the current capital management settings. The objective of this review was to provide flexibility in balancing the medium-term investment needs of ASX with appropriate returns for our shareholders. We intend to maintain the 90% dividend payout ratio policy for the final FY '23 dividends and then to introduce a dividend payout ratio range of 80% to 90% from FY '24. In order to balance the preference of different shareholders, we're also considering the reactivation of our dividend reinvestment plan, and we'll provide further details on this at our full year results in August. As you are probably aware, ASX has a very strong balance sheet with a long-term credit rating of AA-. We have a $300 million working capital bank facility that is used for liquidity purposes, and this facility will be retained going forward. In addition to this and subject to market conditions at the time, we are planning to launch a corporate bond in 1H24, providing $200 million to $300 million of funding to support the expected forward capital expenditure program. We have also reviewed our external performance metrics. And in addition to the 1-year operating and capital expenditure guidance that we currently provide, we will also introduce an underlying return on equity metric that our performance can be assessed against by our shareholders. We have previously reported this metric and would like to give it more prominence for guidance purposes. The medium-term underlying ROE target that we are announcing today is a range of 13% to 14.5%. You can see the historical ROE performance in the light blue line on the lower chart. Over the past 5 years, underlying ROE is ranged from 12% to 14%. So in summing up the finance section of today's presentation, ASX has a strong core business with diversified revenue streams. However, ASX's near-term priorities in regulatory responses and technology modernization, which create an elevated operating and capital expenditure profile in FY '24. And the guidance we have announced today aims to provide ASX with flexibility to balance this investment and also provide appropriate returns to our shareholders. This investment is vital for the long-term sustainability of ASX and creates opportunities for emerging growth. So with that, we are now scheduled to take a 5-minute break. And when we commence back, we'll commence back with the first business line presentation. Dan Chesterman will be taking us through the technology and data business. So we'll take a 5-minute break, and thank you.

Good morning, everyone. My name is Dan Chesterman, and I'm the Group Executive for the technology and data business at ASX. Over the next few minutes, I'll walk you through the overall technology and data business before focusing specifically on the Information Services business, which, as Helen said earlier today, we believe will be a growth driver for ASX. ASX technology and data comprises 2 main product areas: Firstly, Information Services, which drives the commercialization of ASX data, including the design and development of new data products; and secondly, Technical Services, which offers a range of connectivity and hosting solutions which ensure that trading can take place efficiently and reliably for participants in Australia and those connecting to our markets from overseas. Technical Services includes a range of solutions, which enable our customers to not only access ASX liquidity but also that of other venues operating in Australia, as well as helping our customers to connect to each other. Our portfolio of technical services product falls into 3 primary categories: firstly, access to ASX trading, clearing, settlement and data platforms; secondly, connectivity services across ASX Net and ASX Net Global; and thirdly, colocation and data center services at the Australian Liquidity Centre or ALC. The scale and concentration of financial markets organizations operating at the ALC is unmatched in Australia. Equating to hundreds of businesses all colocated in 1 data center. When customers, counterparties, trading venues and service providers can all be accessed almost instantaneously via [ far-off ] cables, traditional data center and connectivity risks, complexities and costs are substantially reduced, while enabling new business opportunities for our customers. I will spend the balance of this presentation focusing on the information services product area as a primary area targeted for growth for ASX given favorable structural tailwinds and in the context of the 5-year strategy discussed by Helen earlier today. Firstly, I'd like to provide some detail on the ASX Information Services product offerings. Starting with ASX Market Source, which provides distribution and licensing of data from both ASX trade which is our equities platform and ASX 24, our derivatives platform for both human and machine-based consumption. Market Source offers a full array of data licenses for our customers, ranging from end-of-day licenses to intraday delayed data options through to low latency data from our trading engines via ASX provided infrastructure, in addition to more tailored data subsets such as top of order book and full-market data to get just a couple of examples. Reference Point includes, as its name suggests, access to ASX reference data as well as corporate actions data, market activity reporting and instrument numbering services such as ISIN creation. Common News offers access to and licensing for the approximate 150,000 ASX-listed company disclosures that we receive and redistribute each year. And finally, benchmarks and indices which includes the revenue and distribution and licensing of ASX-owned and operated benchmarks such as BBSW, as well as our long-standing index relationship with S&P Dow Jones Indices. ASX Information Services are mostly supplied to our customers under fixed recurring revenue contracts with a few exceptions where revenues are linked to assets under management or total value traded. ASX Information Services supports over 1,500 customers around the world who participate in or provide services to ASX' markets. We support a diverse range of customers, including major sell-side market participants, buy-side investors, corporates and specialist traders. Other customers include intermediaries such as major international custodians, domestically focused administrators technical solution providers, financial and regulatory technology companies and others. Importantly, customers are able to access information services, either directly from ASX or via licensed third-party redistributors of ASX data, such as the major international financial market data vendors with whom we maintain supported and close working relationships. We have worked hard over many years to establish a very diverse customer base from across financial market segments, offering our customers a broad range of services and licensing options as well as the ability to access our services via their preferred means of consumption, directly from us or indirectly from a third party, but always on a level playing field basis. Moving on to ASX Information Services financial performance. This chart shows the progress over the past 5 years by product segment. As you can see in the chart, Information Services has grown at a compound annual growth rate of 9.6% over the past 5 years. We have seen sustained growth across all of the product areas [ at land ] earlier which demonstrates the strong and growing demand for data from ASX as the source of reliable comprehensive, timely data relating to our markets as well as the balance we offer in our product range. I will now outline the key market trends that have driven this performance. Our core ASX and ASX 24 revenues have grown strongly over the past few years, highlighting the robustness of the Australian financial markets and the importance of our role within these markets. We've seen growth in individual display revenue and third-party licensing for both onshore and offshore customers. Machine-based consumption of data has been a major area of growth for us over the past decade in particular and has been an important driver of increased demand for our data. This stems from the progressive automation of the Capital Markets workflows, which continues to accelerate as new technologies and capabilities emerge. All aspects of the trade cycle workflow, including pre-trade, post-trade, compliance, risk measurement, portfolio management and trading itself are now subject to a high and increasing degree of automation and digitization. As Helen said earlier, the technology and data business is an important growth area for ASX, which we see being driven by both structural tailwinds and the strategic choices that ASX can make. I will start with structural tailwinds. Investment activity in Australia continues to be a positive feature where ASX plays a significant role across many asset classes. The ongoing growth of our superannuation system and the retail investor base in Australia, in particular, are important sources of demand for data. Whether it will be for real-time prices, portfolio valuations, decision-support data or benchmarks against which to gauge performance. In addition, there has been significant demand to increase breadth and sophistication of indices and benchmarks in response to both -- to growth in both the quantum of assets within Australia's Capital Markets and the emergence of new investment strategies. To help address this, ASX has a long-standing partnership with S&P Dow Jones Indices to produce co-branded major market indices. A second structural tailwind is the development of new markets. We can see that in the medium term, new markets will develop, for example, in areas such as carbon digital assets and the tokenization of real-world securities. ASX Information Services is well placed to play a key role providing reliable, accurate, detailed and timely data to add dependability and transparency to these emerging markets as they are established and mature. Another significant trend is the continued growth of data analytics within financial markets. The increased use of technology, analytics and AI within customer workflow will drive an ever-increasing demand for more granular, comprehensive and timely data. Over time, this has driven an increase in nondisplay consumption data, which is a trend we can see continuing. Moving to strategic growth opportunities. ASX's investment in our DataSphere capability over the past few years has helped us source the human expertise required to work with data in the context of today's financial market and the technology landscape. The DataSphere initiative has also helped us build the skills and knowledge required to develop new capabilities on flexible cloud-based technologies while remaining true to ASX's technology and governance standards. Culturally, ASX is now well placed to understand the way client demand for data solutions will evolve, and we're equipped to develop and launch contemporary new products and services to address this demand. Building on this theme, some of our data has traditionally been seen as the byproduct of other pre-trade trading and post-trade functions. Forces such as financial market globalization, automation and lower barriers to entry have elevated the role of data from being a byproduct of other market functions into a vital asset in its own right. As part of ASX's technology modernization program, data is being viewed as a precious resource. If properly nurtured and made fairly available, data can support our customers as they seek to better serve end investors and to reinforce the robustness for Australia's financial markets. Listening to our customers is fundamental to us responding to industry changes. As an example of this, we note the ongoing trend of major market participants seeking to access raw ASX data from source in order to develop insights of their own. Customers continue to share ideas with us about their plans to drive increased automation and digitization of functions across the trading life cycle and throughout the wealth management industry. In the innovation space, we've established a distributed ledger technology and innovation team, which includes the ASX Synfini platform. This team seeks to partner with our customers and relevant technology companies to explore innovation opportunities and experiments in adjacent areas to current ASX businesses and services. These include the use of DLT, digital currencies and tokenizatioh, all of which have the potential to have significant impacts to the efficient operation of financial markets in the medium to long term. We have also established strategic partnerships with experts in their field in order to complement our own in-house capabilities. These include our market index joint venture with S&P Dow Jones Indices as well as the work we're doing with Google to explore cloud-based solutions, which can help solve some of the more complex data engineering problems we face. In conclusion, ASX data is important. It's a representation of our role at the heart of Australia's financial system. We take responsibility for making our data available in a fair, consistent and reasonable way to our customers. We take confidence in the value that the market places on our data and the opportunities that this area presents for ASX. Thank you. I'll now hand over to Darren Yip to talk to you about the markets business.

Thanks, Dan. I'm Darren Yip, Group Executive for Markets. I joined the ASX in March having spent the past 2 decades with Morgan Stanley based in Hong Kong, leading the Prime Brokerage and Delta One Structured Product businesses. It's an exciting time undertaken this role and to be involved in the strategic planning process for the ASX. Today, I wanted to begin with an overview of the ASX Markets business before focusing on interest rate derivatives. This is a highly topical area given the current rising interest rate environment and its importance as a driver of markets revenue. I will start by outlining the high-level characteristics and drivers of the market which will give context when we look at ASX's historic performance and current state. I will conclude my presentation by discussing how ASX's 5-year strategy, which Helen announced earlier today, supports the markets business. ASX's Markets business plays a vital role in fostering liquidity, price discovery and efficient trading in the Australian financial market. It provides a regulated and transparent platform for investors, traders and other market participants to engage in various financial transactions. It operates in accordance with relevant regulations, compliance standards and market integrity principles to ensure fair, orderly and transparent markets. It promotes financial stability and reduces systemic risk. Markets is ASX's largest business unit by revenue. It encompasses cash and derivative markets trading and the central clearing of listed and OTC products. As you can see, the derivatives makes up the majority of markets revenue with interest rate derivatives being the primary driver which is another reason to focus on this area today. Let's begin by talking about the size of the market and ASX's product offering. ASX operates the largest interest rate derivatives market in Asia Pacific and the fourth largest in the world. AUD 50 trillion and NZD 2.5 trillion worth of Interest Rate Futures and Options are traded every year. We're the prominent regional exchange for fixed income products, and we're the primary exchange for Australian and New Zealand interest rate derivatives. We offer a wide range of products to serve this market. At the short end of the yield curve, we offer a series of 30-day Cash Rate Futures and 90-day Bank Bill Futures. These are complemented by our longer tenant products, which are the 3, the 5, the 10 and the 20 Bond Futures, which caters for market participants looking for exposure to the longer dated end of the rate curve. These longer tenant products are underpinned by a basket of liquid Australian government bonds issued by the Australian Office of Financial Management. We also provide the central clearing of OTC interest rate derivatives. Our markets succeed by bringing many different people together, facilitating the transfer of risk and capital in a safe and efficient manner. The diversity of our customers makes our markets strong, resilient, liquid and robust. We serve the needs of a diverse global customer base, which includes domestic and international banks, financial service firms such as insurance companies, asset managers, superannuation funds, trading firms and market makers, hedge funds and issuers of debt securities. Customer motivation for using our products is broad, such as hedging interest rate exposure, investment and trading strategies, price discovery and transparency and counterparty clearing credit risk management. Each customer segment has a different requirement that drive their activity levels. Now that we have outlined the interest rate market, we can turn our focus to some of the factors that impact our volumes. It's important to note that each of these individual drivers are dynamic and at times interrelated. The economic outlook and monetary policy are the key macroeconomic drivers of the interest rate market. These have a significant influence over the interest rate market and participants' behavior. In terms of monetary policy, Central Bank actions and changes in policies influenced derivative trading volumes. Interest rate hikes or cuts can result in market participants, hedging or trading interest rate movements leading to increased trading volumes. Macroeconomic indicators such as GDP growth, inflation rates, employment data, currency stability in the geopolitical environment impact interest rate expectations, drive trading volumes as market participants manage their exposure relative to these indicators. The combination of these factors can impact market sentiment and participant risk appetite, which in turn can drive market volatility. Heightened volatility can lead to increased levels of trading volume as participants manage their interest rate risk exposure or capitalize on price movements. However, extreme levels of volatility can have a negative impact on volumes. Volatile and large movements in prices can lead to higher potential gains and losses resulting in market participants reducing their exposure and trading activity. A less volatile lower interest rate environment results in larger positions in activity for the equivalent amount of risk exposure. The global macro environment and significant events such as geopolitical tension, elections, economic policy changes, Global Central Bank policy and financial market crisis like bank defaults, can have a significant impact on interest rate markets. These events can introduce uncertainty and trigger shifts in interest rate expectations, impacting trading volumes. The introduction of new interest rate derivative products enhancements to existing products or microstructure changes can stimulate trading volumes. Innovative products or improved trading platforms can attract market participants and generate increased interest rate derivative trading activity. It is important to reiterate that these factors are complex, dynamic and can interact with each other, but ultimately directly influence our interest rate derivative activity. I'd like to spend some time bringing this together by discussing some real-world examples to illustrate how these elements have driven our volume at the short and long end of the yield curve. Starting at the short end. Global Central Bank responses to the COVID pandemic created unprecedented market conditions over the past few years. In Australia, we saw the implementation of yield curve target measure and a forward guidance that rates will not rise before 2024. This significantly reduced demand for our short end products as the flat yield curve, decreased trading and hedging requirements. The subsequent removal of the yield curve target and a quick succession of interest rate rises that followed created particularly high levels of uncertainty and volatility, which initially dampened market activity. Trading firms were particularly impacted, having sustained losses during the application of the yield curve target as the risk management models and strategies no longer applied in these unprecedented market conditions. As you can see on the chart, volumes have steadily increased during the last 6 months as market participants have become increasingly more confident in the macroeconomic outlook and expectation for the RBA's terminal interest rate. As we move into a higher interest rate environment, end users of our products such as banks and corporates, will have a greater need to hedge against interest rate fluctuations. In addition, as volatility continues to stabilize, we expect that trading firms will continue to increase exposure to the shorter end of the market. Turning our attention to our longer-dated products, where one of the drivers of volume is government issuance and turnover. As we saw on the previous slide, the COVID pandemic drove a significant policy response, which came in the form of increased issuance of longer 10-year bonds. The large issuance of 10-year bonds and the higher level is the secondary market turnover drove our volumes through the peak pandemic period of 2020 to 2022. These higher 10-year volumes can be seen on the chart. Quantitative easing the yield curve target and the RBA's bond repurchase activity resulted in the removal of bonds on issue from the secondary market at the 3- and 10-year tenor points. This reduced the supply of bonds in the market contributed to lower secondary market turnover and impacted our volumes during FY '22 and FY '23 to date. A final point to note is that bond issuance and Central Bank activity in the physical market is not the primary driver of volumes. ASX Bond Futures offer an important reference point in the pricing of capital market instruments and the management of interest rate risk. So where are we today? Interest rate derivative volumes have been steadily improving throughout the financial year. For those of you following our monthly activity reports, you will see that activity in our short end products has steadily increased. This has been driven by end users of our products, managing their risk in the rising interest rate environment. In addition, we have seen trading firms have been slow to return to the market, now steadily increasing their activity levels as their confidence in the monetary policy and the macroeconomic outlook improves. Increasingly, offshore customer interest is reemerging as well. Activity in the short end of the curve has increased, predominantly driven by the 90-day Bank Bill Futures, which are up 45% in the financial year-to-date compared to FY '22. At the longer end of the curve, activity in the 3-year Bond Futures is increasing with the 10-year bond future normalizing the pre-COVID levels. A common question that is raised is whether our interest rate derivative volumes can get back to pre-COVID levels. It's important to note that the pre and the post-pandemic period resulted in a unique set of market conditions. The pre-pandemic period was a highly stable monetary environment with near record low interest rates. A less volatile lower interest rate environment results in end users and trading firms acquiring higher levels of open positions to meet their trading and risk requirements. Conversely, in a more volatile increasing interest rate environment, the same trading and risk requirements can be achieved with less open positions. We may need to see a similar environment of stable monetary policy and low market volatility to return to pre-pandemic levels of activity again. Earlier today, Helen spoke about structural tailwinds in the 5-year strategy. I want to give you an overview of what this means for the markets business. Starting with structural tailwinds. The Australian superannuation system will continue to provide opportunities for ASX to support the growth in this capital base. As this capital base continues to grow, there is an industry trend of investment into new asset classes and investment offshore, which provides an opportunity to develop and expand our product offering. The markets business also has an important role in supporting the decarbonization in Australian economy. We're already supporting this trend through our existing energy derivative product set, particularly the Electricity and Gas Futures. We're investigating the potential to improve market liquidity and price discovery by introducing a carbon derivative to our product suite. The dynamic regulatory environment underscores the importance of ASX's role in supporting the financial markets. For instance, the continued regulatory drive for improved transparency and efficiency will support the need for exchange traded products and central clearing services. One of ASX's guiding principles that Helen mentioned earlier, is great fundamentals. We're responsible for critical market infrastructure and the modernization of our core trading and clearing platforms will promote a market that is fair, open, effective and transparent. Modernization of our platforms will enable us to deliver product solutions and market enhancements for our customers. We strive for our customers to regard us as a trusted partner that solves challenges and deliver solutions. We have a strong position in many products. Our focus is in delivering a better customer experience, product diversity and delivering a fair and dynamic marketplace, quite simply doing what we do better. Thank you. And I will now hand over to Blair Beaton for his presentation on our Listings business.

Thanks, Darren. Good morning. My name is Blair Beaton, and I'm the Group Executive for Listings at ASX. Today, I'm going to discuss what makes ASX an attractive market for corporate listings and capital raisings. I'll begin by outlining the virtuous circle that helps drive our Listings business. I'll touch briefly on capital raising activity relative to global peers and then move on to why ASX is an attractive market for both domestic and foreign issuers. I'll finish with a brief outline of what the ASX's 5-year strategy means to the Listings business. Let's begin with positioning. The growing pool of capital in Australia underpins a virtuous circle that helps drive ASX Listings business. Our pension system is the world's fifth largest with assets of $3.5 trillion and that pool is forecast to grow to more than $9 trillion over the next 20 years. This provides a major tailwind for ASX's Listings business and helps make it globally competitive. Compared with our global peers, we do a lot of IPOs. And while numbers are significantly down this year, historically, we have listed around 130 new companies each year. As part of that, we have a long history of supporting companies over a range of sectors and sizes, including earlier stage and smaller companies. Our listing rules and regulatory settings are robust, but are more streamlined than some of the markets. For example, the if not, why not regime provides a sensible non-prescriptive approach to corporate governance and reporting semiannually is less onerous than reporting on a quarterly basis. This also means that the cost of listing on ASX is comparatively less expensive. We all know there's been an absence of large IPOs recently, something we've seen globally. However, ASX has been an active listing venue relative to its peers, and over the years, has consistently ranked in the top 10 by volume of IPOs. This reflects the ability of ASX to support a wide range of listings in contrast to some other exchanges where companies need to be large to gain the attention of investors and justify the listing costs. One of the areas that ASX performs particularly well in is in follow-on offerings. ASX has been ranked #1 by the number of follow-on offerings over each of the past 5 years. In 2022, we were also ranked fifth by the amount of capital raised, as you can see, well above many other comparable and larger exchanges. Two key factors explain this: Firstly, ASX's efficient rule framework that enables a streamlined secondary capital raising process; and secondly, continued investor demand driven by the growing pool of capital here in Australia. Index inclusion enhances visibility and liquidity. It drives retail and institutional investment. ASX offers access to key benchmark indices at a much earlier stage, which is attractive to both domestic and foreign issuers. To get into the S&P 500 in the U.S., you need a market cap of around USD 13 billion, whereas to be a art of the S&P ASX 200, you only need a market cap of USD 700 million. But it's not just Australian investors that are active on ASX. Around 46% of institutional investment comes from offshore and about half of that is from North America. This means that ASX companies also access overseas capital via their ASX listing. Now in choosing a listing venue, potential issuers consider a range of important factors, such as investor sophistication, sector specialization, peer groups, regulatory frameworks and valuation metrics. Looking at the technology sector, the S&P 500 InfoTech Index, which includes companies listed on both NYSE and NASDAQ trades at a premium to the broader U.S. market. However, companies that are more likely to list on ASX are included in the S&P MidCap and small tech (sic) [ SmallCap ] indices. And there, you can see that the valuation metrics are substantially lower. As an example, at the end of April, the EV over forward sales multiple on our All Tech index was 4.2 versus 1.1 and 1.5 for the U.S. Mid and SmallCap Info Tech indices. Now of course, this is at an index level and the need to analyze and control for a specific individual situations. But we find this general theme has held up over time. So our pitch to tech companies is that if you are in the USD 200 million to USD 2 billion value range, then ASX may be a more attractive listing venue for you. I'll continue with that theme on the next slide. I'll now spend some time discussing why ASX is an attractive venue for foreign listings. We have more than 2,000 listed companies across a diverse range of sectors. However, over half of the total ASX market cap comprises of resources and financials. This drives investor demand for diversification into other sectors and other geographies. There are currently over 245 foreign companies listed on ASX and 150 of them joined the market here in the past 6 financial years. They did so either as a sole listing, where ASX was the only listing venue or as a dual listing, where the company also had a listing on another exchange. The most successful markets for foreign listings have been New Zealand and the U.S. Companies exploring a cross-border listing have a number of considerations. One of the first things they're looking to is the peer group to understand how similar companies are trading here. ASX has strong comparables relative to other markets in a range of sectors from technology and health care to resources and financial. Where there's not a large peer group here, a key driver could be the expertise of the investors in that company sub industry. As an example, ASX investors have deep knowledge of the gaming industry due to companies such as Aristocrat, which has been listed here since 1996. A similar NASDAQ-listed and U.S.-based company, Light & Wonder, took up a dual listing on ASX last month. Where there is a relatively small peer group on the ASX market, companies can also find it easier to stand out and attract investor interest. Now from an investor perspective, foreign companies will naturally be asked, will I come to Australia to raise capital? A nexus to Australia is very important when selling their equity story. That can come through customers, operations, founders, business partners or existing investors. Given the proximity and connectivity with Australia, our biggest cohort of foreign listings is from New Zealand. ASX is an attractive venue for New Zealand companies because it offers access to a deep pool of capital and in most sectors, a larger peer group. There are now 63 New Zealand companies listed on ASX, an increase from 20 in 2013. In 2018, 0 was dual listed and conducted a global review of listing options, including looking at NASDAQ. It found that dropping its New Zealand listing and consolidating on ASX delivered better access to global investors, better liquidity and index inclusion. And they got all of that without some of the more demanding reporting requirements of a U.S. listing. There's further scope to grow the number of New Zealand domiciled listings. And in 2019, we opened an office in Auckland to capitalize on this opportunity. We're targeting IPOs of private companies, as well as listed companies that would be attractive dual-listing candidates, all with the objective of bringing Australian capital to help grow New Zealand companies. The second largest cohort of foreign listings is from the U.S. In the United States, companies generally IPO at a much later stage. They need to be large enough to gain the attention of investors and to justify the cost. Third-party analysis shows that the overall cost of a U.S. listing is about twice that of an ASX listing. And while costs are important, the focus on large caps in the U.S. and therefore, the impact on the cost of capital for smaller cap companies is perhaps a bigger factor. Now traditional reasons for listing are arguably just as important today. Our listing provides access to capital, provides liquidity, visibility and importantly price transparency. For some U.S. companies, the choice is whether to take another private round, or to explore listing on an exchange like ASX. Life360 is an example of a company that chose to list here instead of taking a late-stage VC round. The majority of U.S. companies listed on ASX have their primary and only listing here. However, there are a number of larger U.S. companies that have a secondary listing here because they are generally well-regarded sector peers and strong demand from Australian investors. Block is a recent example, and Newmont have also indicated that they will list on ASX as part of their takeover of Newcrest. Finally, it's important to note that the growth of foreign listings depends on the capital markets ecosystem as a whole. ASX works with all members of that ecosystem, bankers, lawyers, other advisers, VCs, pre-IPO investors and importantly ASX foreign listed companies to build on the success to date and to further grow investment options here. I'll end by summarizing what ASX's 5-year strategy means for listings. Helen outlined ASX's purpose earlier on. A subset of that is the purpose of the Listings business, which we articulate as enabling efficient access to capital for issuers and wealth creation opportunities for investors. This is why our Listing business exists and how it positively impacts our customers. The Listings business has structural tailwinds and strategic drivers that we will leverage to grow our business. Companies and investors have an enduring need for capital, liquidity and price transparency. ASX's value proposition remains strong due to ASX's -- excuse me, to Australia's large pool of -- and growing pool of capital, a strong capital markets ecosystem and efficient regulatory frameworks. We have some great policy frameworks and it's important that we continue to optimize those rulebooks and settings to maintain our attractiveness. For new listings, we'll be executing a targeted offshore strategy, focusing on industries and geographies where ASX has a compelling value proposition. We'll prioritize New Zealand and the United States and remain open to selective opportunities in other jurisdictions. We'll also continue to grow and develop the ecosystem of corporate and investment product issuers through engagement and education programs to reinforce the attractiveness of our offering, that's all with the goal of getting Australian companies to choose ASX as their listings venue. All of these activities feed into the virtuous circle that drives the success of the ASX Listings business. Thank you for listening. Hopefully, this has provided you with some useful insights into the Listings business. And I'll now hand back to Helen.

Thank you very much, Blair. To conclude, I just wanted to summarize what you've heard from us today. So ASX has significant strengths. We've got strong foundations of our 4 core businesses and we're supported by structural tailwinds, and we have a 5-year strategy in place to ensure that we benefit from these. But we do have some near-term challenges, which we must face into. We operate critical market infrastructure, and we must continue to work cooperatively with our regulators and take all necessary steps to rebuild confidence and restore trust with all our stakeholders. And we need to make a significant uplift to modernize our technology capability and platforms. This is a multiyear investment to secure the foundations for ASX to deliver on our potential. And we focused on underlying return on equity as a key performance metric for shareholders. So that concludes the presentation part of our Investor Day. And we'll now switch to the Q&A part of the day. So I'll invite my fellow presenters up to join the panel. We'll begin with questions in the room, and then we'll take questions from the webcast.

Kieren Chidgey from Jarden. Maybe just starting on the financial numbers, the cost guidance. Can you unpack in a little bit more detail some of the key drivers into the '24 year? Just noting, I think in second half '23, you might be incurring about $15-odd million one-off or less recurring sort of costs around CHESS and some of the regulatory reporting you outlined. So just wondering what sort of contribution on that front sits in that '24 number? And then if you can give us a little bit more color sort of how you're thinking about the medium-term in terms of that reduced cost growth into '25?

Great. I might hand that one straight over to Andrew if that's okay.

So your question in relation to FY '23, first of all, we've called out an expense growth expectation of about 12%. And to your question, there's an element of sort of I suppose, CHESS-related design costs as well as regulatory costs that we've incurred this year, that would be sort of 3% to 4% of the total of 12% as an estimate there. So your $15 million is broadly sort of correct there. Going into FY '24, the callout of 12% to 15% really represents the needs of the organization in terms of supporting the technology modernization, the regulatory issues that we have in front of us. We haven't specifically called out for next year what component of that relates to regulatory activities. But no doubt, we've got 2 more special reports to get through. Both of those special reports also come at a cost with an insurance wrapper. So EY will be doing the audit of those special reports. So that will lead to elevated costs in relation to those regulatory components as well. But we haven't called out those specific components at this stage.

All right. And just on the drivers then of the 12% to 15%. So is it predominantly recurring and maybe you can just unpack some of the areas where those costs are going?

So they would go to the same themes that we've highlighted over the previous year in terms of increased technology capability. We've spoken a bit about that today, increased risk and regulatory capability and increased customer experience capabilities for the organization as well. That goes to people costs, but it also goes to sort of external sort of provider costs such as technology partner costs as well as technology more broadly as well.

And Helen, just sort of related with that more from a strategic point of view, you are flagging a significant step-up in technology modernization 12 months ago. It was put to the market that ASX was very advanced on that front and had significantly refreshed its technology stack with the exception of CHESS. When you talk about tech modernization, putting CHESS aside, what has changed over the last 12 months in regards to that previous statement?

You'll remember in August '22, we did put up that technology slide showing that while we focused on the modernization of our equity technology, there's still more to do. So that remains the case. And really, we find ourselves with a couple of specific challenges here, which mean that we're needing to expand that program of work. Obviously, one of them is the fact that we still have CHESS replacement to do and we were expecting that to be done this year. So based on the plan from a while ago, we would have done CHESS replacement. We'd be switching off current CHESS, we'd be switching to getting on with the rest of the technology modernization that needs to happen. Obviously, circumstances have changed. Now we're going to be maintaining current CHESS for longer. We've got CHESS replacement still to do, and we still have those important technology uplifts to do in other areas of our business. So really, it means that we're needing to expand that program of work. I'd also add that there are other aspects of technology that's changing, obviously, increasing cyber investment, that's just a continuing theme. But of course, in terms of customer expectations, every one of those lives in a digital world and our customers absolutely have increasing demand in terms of what they expect to see from our technology, too. So there's those more general factors too. But the big one is really the expansion of the program to reflect that there's just more to do simultaneously than there would have been had we not been pausing the CHESS replacement project.

Ed Henning from CLSA. A couple of questions from me. Just further on cost to start with. Can you just talk about any risk you see in future rebates or readdress just in regards to the CHESS above the $70 million that you've called out at the moment? And then just partly following on from Kieren's question, you talked about obviously increase in technology. Can you talk about the increase in amortization potentially coming through when that will come through? And will that offset some of the drop-off in cost regarding the CHESS replacement you're doing at the moment?

Yes. Thanks. Ed. Do you want to jump in on that?

Yes. Thanks very much. Ed. And I suppose your question in terms of the amortization profile, first of all, I think you can see on the chart that we've called out today sort of the different colors representing sort of the operating costs versus the depreciation and amortization. And going into next year, it will be about the same sort of -- somewhat of a little step up, but no dramatic step up into next year. Noting that through the derecognition of the CHESS capitalized software that we had on our balance sheet that sort of led to a bit of a reset of the capitalized asset that's sitting on our balance sheet. The forward CapEx program, then will take a little while to effectively amortize through. And so I'd expect an increase in amortization and depreciation, but not for a couple of years coming through in terms of that profile. Your question in relation to sort of the CHESS rebates and partnership program. We have announced, as you know, up to $70 million, and that's the current expectation. $15 million of the rebate component that will be paid in August this year. And we expect to effectively pay or provide for the balance in the incentive pool component. And so that will be $20 million in this half. The balance of the program, the balance of the pool of the incentive program is subject to the CHESS solution design and the timetable around that. That will be subject to stage gating and accreditation through the participants as they get through those stage gates into the future. So it's a bit hard to predict that just yet until we've got the final solution design and implementation plan.

No, I guess the question is, do you feel comfortable that $70 million is enough as you go forward in that new program?

Yes. It's a substantive amount of money, and we feel comfortable at this stage. That's right.

That's helpful. And just a second one. You talked about Horizon 1 and then Horizon 2 today in the presentation. Is Horizon 1 just all this rebuild, refresh technology and then Horizon 2 is the growth? Can you just talk about when we finish Horizon 1 and when we go to Horizon 2 and what that also entails? Can you give us any more detail on the growth part of it?

I can. But what I would say is that it's not really a sort of we're in Horizon 1 and then that's it, we're done, and it's the Horizon 2. It will be a bit different for different areas of our business because actually, there are parts of our business where we've invested in the platform, we've got good capabilities. We're in a growth position already. And so the data business that Dan was talking about is a great example of that. So already in a good position, and we'll be working further. That's not to say there's nothing further to do in terms of fundamentals around that, but we've got a good position for further growth. Whereas in other parts of our business, the technology modernization that we'll need to do is actually will take a number of years. So there isn't really 1 solid cutoff between the 2, and there are definitely areas of growth even in Horizon 1, where will -- our primary focus will be on the regulatory commitments and the technology modernization. But to the extent that it's feasible, we will still be focused on small growth areas. It's really, I think what you'll see between the 2 horizons is a shift in focus and a shift in the scale of our investment to the sort of fundamentals piece versus the growth piece.

And is Horizon 1 is supposed to take up the 5 years and then Horizon 2, are they both within the 5 years?

No, both within the 5 years.

Okay. No, that's helpful. And then just one final one on that one. You obviously talked a lot about the existing businesses now and the opportunity with the existing businesses. Is there any scope you talked about potential acquisitions like beyond your existing businesses, how should we think about growth beyond the current?

Yes. Look, that's a great question, Ed. And I guess what I wanted to flag is that we're thinking about those things. Now right now, our focus is on those near-term priorities, and I think that's right and appropriate. It's the right area for us to be concentrating our attention. But as I think about our position in the Australian and New Zealand market and where our core strengths are, I think that there are some fantastic opportunities for us, we've pointed out some of them today. But we have some real strengths to draw on. And sometimes there are opportunities arise for us to actually add capabilities. And if I think about a couple of those over the years that I'm familiar with, obviously, we took over as the benchmark administrator for BBSW. And I think that's been really successful, both for the market and for us. We partnered some years ago now, but with a company called Decipher on Electricity Futures and then bought all of the Decipher and we were able to fold that in and integrate that into the ASX product suite. And again, that was a really valuable addition of some deep expertise in that market, which had enabled us to sort of consolidate those kind of capabilities onto some fantastic ASX platforms that were already really well connected across the market. So I think I'm really just signaling that there's no immediate opportunities that I'm flagging around the table. But there's certainly a lens on what are those adjacent opportunities and how does it make sense to realize value from.

Andrei Stadnik from Morgan Stanley. Can I ask my first question just around your use of the cloud. I mean some of overseas exchange peers have made very ambitious statements around how they can use the cloud. So in terms of your systems, your trading systems and your broader kind of data storage systems today, how much are using the cloud? And what is your ambition in terms of where you'd like to see that?

Yes. So I might take that briefly, and then I'll hand over to much more expert people on the panel. But I guess, I think overall, our aim will be use it where it's appropriate. And I think I would say that for trading, we don't necessarily see cloud as being the right tool for sort of ultra low latency trading platform. But we definitely see that there are opportunities beyond that. Maybe I'll hand to Dan initially, and I know you already called out some cloud capabilities from a data perspective.

We certainly see value working with the cloud providers, and we've primarily done work with Google, but also with AWS in the space of data. And the value there really is that we can access really fantastic product development capabilities and also distribution capabilities. So getting the cloud to be helpful both in the speed at which we can develop new products, but also providing it in a form that customers were on to consume it. But I agree with Helen's point about the fact that with all of those announcements, the other exchange peer groups have made, there is a long lead time associated with that. In many cases, it's about bringing cloud technology patterns closer to the data center rather than moving matching engines to the cloud. I'm not sure if Tim, you'd like to add anything?

Sure. So I think that with the trading systems, as Helen mentioned, it's about low latency. And so that's not -- while cloud people are working on that. That's not sort of a focus for us, but certainly for the clearing and settlement capabilities, leveraging the scale and the ability to support change is a key area that we're definitely looking at.

My second question is around the potential for additional competition from Cboe, they announced this week they are thinking about listings in Australia. And the second part, just also in terms of Cboe become in terms of providing market data in the likes of Refinitiv and Bloomberg, does Cboe now become potential competitive for you in terms of providing market data? So how do you think about those kind of additional competition angles from Cboe?

Thanks, Andrei. So I guess the first thing I'd say on the listing side is just bear in mind that there are already multiple listings providers in Australia. So there are already choices about where to list even in Australia. And as you've heard from Blair, we do see listings very much as a global playing field. So we already really compete on a global playing field there. So Look, no particular insights in what or when Cboe will do that. But I think really our focus is on making sure that we offer a fantastic listing environment for listed companies and for investors. And sorry, Blair, anything you'd like to add there?

No. I think Helen is right. We believe that we've got the right policy settings for admissions and monitoring. As I mentioned in my presentation, we've got a very efficient rules framework for raising capital, both on IPO on a secondary basis. We'll continue to monitor those to make sure we're globally competitive.

And at this stage, nothing really to add on the market data point other than that. We've got obviously some really fantastic and unique data in the ASX environment, which I think continues to have value. And actually, we work very cooperatively with multiple data providers and market data venues to distribute that. So they're important distributors for our business. Thanks, Andrei.

Okay. It's Nigel Pittaway here from Citi. I wanted to, first of all, ask about pricing, particularly given a, the inflationary environment, but b, obviously, you'll need to rebuild reputation, et cetera. I mean there are certain areas, EG derivatives, where you could argue your pricing is still relatively high. So how broadly across the organization are you feeling about your pricing power and your general attitude to that?

Yes. Look, I think there are really different areas of our business when it comes to pricing and what makes sense. I think that in terms of the derivatives business, one of the things we think about is that actually we have a set of various rebate schemes in place. And actually, maybe our headline pricing is a little bit misleading, maybe misleading is not the right word, but there's a -- it's important when you're looking at pricing to take into account the full frameworks to actually understand the overall pricing impact, which I appreciate makes it a little bit more complex. And we do actively review pricing to try and make sure it's competitive, it's set at the right levels. And that's something we do quite proactively. Obviously, there are areas of our business where we typically haven't made any pricing adjustments because we're reasonably comfortable. There's areas where we feel like there's more pricing flexibility or, for example, in Information Services, where we've got different types of usage of our data. So actually, we've been developing new kind of approaches for how we might price things. So it's really a range of different settings.

Right. So -- but is there noway where you feel your pricing is wrong or where you feel you're going to be putting through price increases to reflect inflation? I mean, how generally you're sort of viewing that?

Look, I wouldn't flag any specific areas. I mean there's a few areas where we've already communicated certain price increases to the market that will be effective from 1 July, they are more just sort of regular review cycles that we've already published. There are definitely some areas where we've got quite dated pricing in place. So there's a couple of areas where we've just got pricing structures that have sort of not maybe been reviewed in a long time. And last year, we talked about the change to assure services pricing, where we just tried to change that into a much more pricing structure, which was sort of more predicted the issuers and which was more appropriately linked to where the value is in the service that we provide there. So maybe that's an example of a pricing structure that had been in place for a long time where we did a more substantive review. So obviously, we announced that one last year. Nothing immediate to announce there, but I'd say that we've got a couple of other areas where there's fairly historic pricing in place where it's possible there could be structured changes.

Okay. Changing track slightly. Just to your medium-term underlying ROE target of 13% to 14.5%. First of all, how you're defining medium term? And secondly, what do you think would swing it from one end of the range to the other?

Andrew, do you want to add on that?

Yes, happy to take that. Nigel. So I suppose the initial setting of the guidance range, medium term, is the next 3 years or so, I would say. It's part of our 5-year strategy, but it may be subject to review. But medium term, I would say, over the next 3 years, recognizing that Horizon 1, in terms of the investment that we need to make in technology modernization and also the regulatory sort of costs that are in front of us. So we think those settings are appropriate. In terms of what can swing and I think you can do the sensitivities either on the expense side or the revenue side, pretty easily to work out some of the sensitivities around that. And today, we've given you expense guidance into FY '24 and also the call out into FY '25 knowing that we will undertake the expense reviews in the course of FY '24 focused on sort of workforce mix, automation and simplification opportunities as well as strategic procurement opportunities and I expect the growth rate of expenses to slow into FY '25 compared to FY '24. So again, just to emphasize that point, but I let you sort of work out the sensitivities around that from an ROE perspective.

But I certainly think what you see is, obviously, the material shift there is that revenue outperformance would be a major driver there.

Okay. And maybe just finally, there are a couple of things you sort of talked about before, which is perhaps a surprise wasn't mentioned, which is you're still persisting with Sympli. And secondly, you previously talked about listings in Israel, which didn't get mentioned today. So just on those.

Thanks, Nigel. So Andrew, do you want to touch on Sympli first?

Sympli. So we called out today sort of a review of our equity investments. And I suppose the example there is the sale of yield broker. We will look at our equity investments that we do hold, and that includes Sympli grow and also investment in DA and so over the course of the next 6 to 12 months, we will review sort of the strategic alignment and value proposition of those investments.

And then Blair, do you want to pick up the Israel point?

Yes, happy to pick that up. As I mentioned earlier, our focus on our offshore strategy is clearly on New Zealand and the U.S., looking at other markets on an ad hoc basis. We're not focusing on Israel at this point in time. It's a very -- it's a highly competitive market. There's a number of other exchanges looking at it. If we look at the adverse selection you might get in a situation like that, we think that our resources are better spent looking at other markets where we have a clear competitive advantage.

Scott Russell from UBS. Just picking up on the ROE question again, Andrew. There was no reference interestingly to capital management. Can I just confirm then that that's a fairly objective number? I'd just be interested in quantifying how you think about your minimum capital requirement.

Yes. So we effectively have a sort of a minimum requirement that is sort of published in terms of the regular reporting that we have on a half yearly basis. And so we expect that to increase slightly, but not dramatically over the course of the next 5 years to support the business. But in terms of capital management settings more broadly, we called out sort of the proposed or potential introduction of a corporate bond in terms of providing support for our sort of medium-term capital expenditure program for one. We've also introduced, as you know, sort of a range around the dividend settings. And also, we'll consider sort of the -- effectively the reactivation of our dividend reinvestment plan as well. So the settings today that we've announced really support the 5-year strategy rather than just thinking about the next year and provide flexibility for the organization amongst different sort of scenarios over the course of the next 5 years. So that's the way we're thinking about it. But the capital impulse, we're not expecting a material increase to sort of the capital that we hold in the organization.

No. I mean, I think at some -- one point there, there might have been a view that you had some buffer that was perhaps redundant. In the report you referred to, I think, the default capital, right, the $750 million for the clearinghouses and then I guess my question is, over and above that, the $750 million what is the working capital requirement that the ASX needs in the medium term to support that ROE target?

Yes. So we have an internal assessment for things like strategic business risk capital, operational risk capital that we hold within our internal sort of forecasts and models.

Okay, sure. And the corporate bond, $200 million to $300 million, is there a range of gearing within which you'd be comfortable?

It's quite modest gearing. We're not geared at all. We have sort of an undrawn facility, if you like. We draw it from time to time for liquidity purposes. At the moment, that will be retained. That's a $300 million bank facility that we have at the moment. What we're calling out today is $200 million to $300 million of a potential corporate bond issue. And if I think about our AA- sort of credit rating from S&P, we've got significant headroom before that sort of credit rating would be at risk. So very modest levels of gearing is what's proposed today.

So even the full drawdown of the facility, the $300 million and the top end of the range, $300 million corporate bond issue, $600 million, that would still be within your comfort range?

Very comfortable, yes.

Just one other very separate question, if I can. As we think through U.S. markets, SEC working towards a T+1 next year in May, maybe this is a question for Tim on CHESS, but maybe more broadly, is shortening the settlement period a priority for the CHESS redesign? And what's your sort of preparedness would you say for moving to a T+1 or shorter 1 day?

I might pick that one up, actually, Simon (sic) [ Scott ]. So Look, T+1 is certainly a question for the market. We're comfortable that we can support T+1 settlement, whether it's on current CHESS or CHESS replacement. So it's not -- there isn't a dependency there. What we have done is recently reached out to the market just for a refreshed important T+1. So the last time we consulted on T+1 settlement, the broad view from the Australian market was not yet thanks. But we're reaching out, given the timeline in the U.S., we're reaching out to sort of refresh that view and see what the input is. So we'll explore that more as we get some feedback from our customers in due course. I would maybe just add, while the microphone is changing. I think although it's pretty feasible for us to do the T+1 shift. I think the bigger impact is really for market participants as a whole. So the challenges are really on the market side, the rest of the market, whereas I think from an infrastructure point of view, we can certainly support it. So the feedback will be interesting.

[ Mark Nathan ] from [ Real ]. Just following up from, I think, Nigel's question earlier minority stakes, but more broadly just new projects, CapEx. How does the ROE target sort of guide that? And what are the sort of the hurdles? Because a lot of the projects in the past have been -- some have been defensive, some have been new opportunities. But when you're looking at new opportunities, how does that ROE framework sort of frame how you pursue it? How do you think you'll be looking at the minorities when you look at in the context of that?

Yes. Maybe I'll take that initially and then I'll hand over to Andrew. But if I think about it from a more strategic point of view, most of the investments we have at the moment are fairly small. So they're not hugely material from an ROE perspective. I would say, though, I think the question we need to tackle is a minority stake actually effective in terms of being able to bring the strengths of ASX to bear. And I think in some cases, it is, and it can be effective, but there are other cases where I think that's being less true. And I think the cases where we've actually completely bought something out right and being able to actually integrate it is where we've actually been able to deliver more value. So I guess that would be my perspective. Now clearly, we have minority stakes in various things for different reasons. So they're not all about sort of buying something and integrating it as in the case of DA, it was obviously related to DLT partnership and ensuring that they have the right capital and support as we were continuing to use them. So there's different reasons. But from a strategic perspective, I think we'll be looking very carefully at any investment we make and the investments that we have to make sure that we actually have the right structure to drive value from the investment because that's ultimately the goal, right? It's like -- there's no point in holding an investment in something because it seems like a nice idea or a nice adjacency if you're actually not able to drive value from the partnership. So maybe on the ROE question, I'll hand over to Andrew.

I think ROE to me goes to resource allocation decisions more broadly, whether it's an internal decision or an external investment decision. So we do apply that, as you'd expect, sort of a disciplined business case framework to these decisions around resource allocation, and that will continue.

Any more questions in the room before we go to the line?

Kieren Chidgey, Jarden. Just a question back on sort of the Markets business and the presentation around Futures. It was called out that some of the trading orientated clients or participants, obviously, pulled back post RBA sort of whipping away yield curve control very abruptly. Just wondering if you can provide any color or commentary on sort of their contribution to volumes currently relative to pre-COVID?

I'm afraid we don't tend to give the breakdown of different types of clients. So I'm -- so we can't give you any absolute numbers. I guess what I might add to what Darren went through earlier is that we certainly saw trading conditions with yield curve control were very different. And that was really the period of time where some of the models for those trading participants just weren't really making sense anymore, right? When you've got a fixed yield curve, there's not a lot to do. So you really had a significant withdrawal then of that activity. And then the kind of fairly extreme volatility that came with taking off also created very challenging trading conditions. I think what we're seeing now, and obviously, this is sort of coming through in some of the increased volumes that we're seeing, and you may have seen the activity report that we released today as well, which was positive too. We're definitely seeing some of that activity come back. Now sometimes it takes a little while. It depends on the strategy, depends on the models, depends on how much data history they need to sort of get everything working well again, but we're certainly seeing some of that return.

That was pretty much it. I think the only thing I'd also mention is that there has been increased interest coming to set up, and that's encouraging. And obviously, we can see it in the volumes as well.

Sorry, just a quick follow-up around that. I would have thought sort of volatility is generally positive to some extent, obviously in credit markets.

To some extent, it is. Yes.

But I think in your commentary, you suggested that wouldn't really be until we saw the RBA's sort of reach its target rate and pause before you saw some of that activity come back. So I mean what do you regard as the bigger driver at this stage of where we're currently that we need to hit the end of this interest rate cycle? Is that more beneficial at the current point in time relative to the volatility?

I think and I guess sorry, I'll give you maybe my view and then add in. But I think, look, I can't give you an outlook on sort of where -- what the volumes in the interest market will be. We're just trying to give you a sense of what the drivers are that to sort of make sense of some of it. I think that the key points to highlight in terms of particularly open interest and size of positions is that for certain strategies, not for every type of activity, but for certain strategies, that very low interest rate, low volatility environment means that when someone is taking a position that's sized to risk, then the actual size of the sort of notional value of the position could end up being very large. Whereas in today's environment, you've got higher interest rates and more volatility, the same kind of allocation of risk results in an absolute smaller position. Now that's just 1 type of trading activity. It's not everybody. But it does mean that there's some -- it does have quite a big impact when you've got that very low interest rate, low volatility environment. It actually ends up being quite material in terms of the sort of additional chunk of open interest and trading activity. And so that's that specific activity, which is sort of -- it's kind of unique to that kind of environment. And it's not gone away completely. It's just that the positions that those types of strategies would take in today's environment are just relatively -- they're just smaller relative to what they would be in that kind of pre-COVID environment. That doesn't necessarily mean interest rate volumes won't go back to pre-COVID levels until the interest rate environment looks exactly the same, just for that particular component, it's scales depending on the environment. Like beyond that, obviously, it's good to see volumes being pretty healthy this year. Good to see that our customers are clearly using our interest rate products as their sort of primary hedging tool in this environment. So I think all of that is positive and where it goes to, we'll see. Sorry, did I cover all of it? Sorry. I can't help myself. Sorry.

When you think about some of the tech upgrades and growth initiatives that haven't worked well over the last, whatever, 5, 10 years, what are the overall key learnings and lessons at ASX? And how will you make sure it's different? Why will it be different from here?

Look, I guess what I would say is that big technology projects all have their own unique challenges. And so there isn't necessarily a single set of lessons learned. But if I look at the CHESS replacement solution design, obviously, back in November, the conclusion that we came to was that the specific solution design that we'd put in place just wasn't going to be able to meet the really high standards that we set as critical market infrastructure. And that's -- that is -- look, that's an unusual outcome, right? Big technology projects often are difficult. It's not unusual for them to have some delays and to need to sort of address things and try and fix them. But actually getting to the point where you go hang on, this solution design actually isn't going to work, that's a relatively unusual outcome. Perhaps a more -- we obviously, when we went live with the ASX Trade platform, I think it was late 2019 when we had an outage on the day we went live. Although I'm happy to say that platform has been working extremely well and robustly since we got it back online, and it's been all good since then. But the specific issue that we experienced then was actually to do with a test case. So it was a testing. It was a testing issue, which had been picked up in testing and then sort of not in retesting. And really, what that led to was we've done a really significant review of our testing frameworks and quite a big shift across everything we do in terms of the testing frameworks and how we apply them and really increasing the sophistication of our testing capability. So that was, I guess, the specific from that particular issue. I think more broadly, we've absolutely been focusing on the need to really lift our consistency and capability across project delivery and make sure that we can just deliver reliably, robustly and make sure people have confidence in that because we recognize that when we -- typically, when we're doing projects, they often impact other market participants. And so clearly, the -- when we do things, the whole market is affected. Tim, do you want to add anything to that?

Yes. So I'd say there's 2 different sorts of risks. I would say, based on my study of history, you know that ASX is actually quite good at executing a lot of change right across all of their market systems, and they've implemented that over many years. As we called out that is 2 challenges. One, big projects come with a different risk, it's not about the implementation. It's about trying to coordinate a lot of different factors over a long period of time. And so that's certainly the challenges we've had with CHESS and as Helen said a lot in the design. The other work, I think it's more about how do we -- if we have faster change, as I was talking about, driven by the technology risk or other market drivers, then we actually need to get better at making change more quickly. And one of the challenges we have here at ASX as compared maybe with the bank is actually obviously the availability requirements are basically 100%. So therefore, the level of quality that the process is for implementing change and need to have in them are quite strict. And obviously, the regulators also have a high oversight of that activity. So a few different factors and quite different between the large projects and just change more generally.

Andrei from Morgan Stanley. Can I ask a follow-up around the dividend? So the PAT target range is shifting from 90% to a range of 80% to 90% . But at the same time, you're getting $55 million of cash from yield broker sale and you're getting potentially more freedom on the cash side if you raise on corporate debt. So does that mean you could still remain at the 90%? So how should we think about basically that target range?

Yes. Thanks. Andrie. I'm happy to grab that question. I suppose, as I said before, the capital management settings more broadly, including the dividend range that we've announced today really is supporting the 5-year sort of outlook rather than just the immediate 12 months ahead. And so to your point, you could construct variations around the capital management settings. So for example, we understand that our shareholders really value a fully franked dividend, and we've got surplus franking credits. So that's important to a large component part of our shareholders. And so it's feasible that we maintain a higher payout ratio and have a DRP, for example, to reduce several net payment of that dividend amount. So there's different ways we can think about it, but we wanted to announce today sort of the various sort of opportunities and different settings that we may sort of employ going forward.

Siddharth Parameswaran from JPMorgan. I had a question just around just the commentary around, I think, faster refresh cycles on technology and just whether that is likely to lead to a faster amortization rate. Going forward -- I mean, you gave us some visibility on the next couple of years, but I was just wondering going forward, we've had a big difference for the last couple of years around CapEx and D&A. I'm just wondering beyond that, will there be a much faster amortization beyond the next couple of years?

I'm happy to grab that question as well. So it's difficult to forecast at this point in time beyond the next couple of years. If you think about -- I mentioned before, our capitalized software balance at the moment sort of leads to this year, around about $35 million to $40 million of depreciation and amortization for this year, but expect a modest step up next year. And if we're spending $110 million to $140 million for the next couple of years, amortization and depreciation will tick up a little bit, but it depends on sort of the timing around what we implement and when we actually put those assets into use. So for example, it may be several years before we use some of these capitalized assets before we start depreciating those assets. So it's a combination of factors that will inform that depreciation and amortization number. The faster cycles around technology may lead to a component part of that being implemented and used earlier than previously thought potentially, and therefore, that would lead to sort of an increased amortization. There's also the mix, as Helen called out before around Software-as-a-Service and the treatment from an accounting perspective, expensing Software-as-a-Service, sort of license fees and consuming those services straight away versus a deferral in sort of capital expenditure. So there's a different number of, I suppose, inputs into sort of that profile going forward.

Okay. Just on CHESS, just with the 4 options being considered, are they all likely to end up with similar end states for the business? Are there -- I mean, is the design parameters set?

Thanks, Sid. Do you want to take on it, Tim?

So -- certainly, the business requirements and the design of the business requirements is more or less set. I already talked about some scope workshops that are underway, but that's for a set of particular functions, but certainly providing a system that supports all of the current processes, moves us towards industry standard interfaces for ISO and fixed interfaces, and a number of other efficiency processes that were already in the plan are part of the outcome, and that's what we've consulted with the industry on a number of years ago. And so that's what we're currently reviewing. But more or less, the outcomes of business outcomes are expected to be the same or very similar.

And sorry, is it scaled back significantly from the original business case?

As I understand it, the functionality is very similar to the original business case, take into account we'll do a new business case with -- once we've locked down these last pieces of scope and have a new design. Obviously, then when you choose a solution design, then we'll work with the industry on particular lower-level design issues in our rules or that level. But certainly the scope will be the same.

Any other questions in the room? Okay. I think have we got questions online then, Simon?

We do, Helen. A question from online is, can any of the elements that have already been developed for CHESS replacement be reused in the next situation?

For you, I think, Tim?

Sure. So that's definitely a part of the work. I talked about looking option 1 being looking at the current DLT solution and seeing whether we could reuse parts of that or fix parts of that or all of it. Certainly, irrespective of the actual technology solution, we can certainly reuse a lot of the work that was done in the project around one of the key requirements -- that are one of the key factors that's making this redesign work well is that we have a very detailed set of business requirements that have been agreed and even tested by the industry in many cases. So that's certainly going to help with the -- with our ability to estimate and set out the project, which is certainly already making a difference to the work that we're doing. And certainly, beyond what a project would normally have at this stage. And the other piece is we've done a lot of work around the ISO standards, so the interfaces, so how the industry connects to the system, ISO and Fix. So we'll certainly be looking to leverage all of that work as a minimum.

Another question this time regarding expenses. Given that you have good visibility of your technology roadmap, including CHESS replacement, are you able to give guidance on OpEx and CapEx beyond FY '24?

We're not giving any guidance at this point beyond FY '24. I'm afraid, no.

And the last question, and this is regarding Sympli. Can you please provide an update on interoperability and the outlook for the pathway to profit?

Do you want to take that one, Andrew?

I'm happy to take that one. So the interoperability legislation, the enforcement component of that, the dates for that enforcement is due to be handed down by the New South Wales authorities over the course of the next month or so, and that will set a pathway forward in terms of when the business model can be fully operational, if you like, and then that determines the pathway to profitability beyond that time.

Any other questions online?

That's all. Thanks.

Well perfect. Great. Anything else in the room? Fabulous. Okay. With that, I just wanted to take a moment to just recap key messages from today. So first of all, ASX has significant strengths. We've got the strong foundations of our 4 core businesses, and we're supported by structural tailwinds. We've got a 5-year strategy in place to ensure that we benefit from these. Second, though, we've got some near-term challenges that we need to face into. We operate critical market infrastructure. We need to work cooperatively with our regulators and take all necessary steps to rebuild confidence and restore trust with all our stakeholders. And we need to make a significant uplift to modernize our technology, capability and platforms. That's a multiyear investment to secure the foundations for ASX to deliver on our potential. And third, those 2 factors were reflected in the financial metrics and the guidance provided today. Our investments in our regulatory commitments and our expanded program of technology modernization are supported by the expense and capital expenditure profile that we discussed today together with the revised capital management settings. And finally, we're going to be focused on executing with discipline, including our attention to our expense base and we're focused on underlying return on equity as a key performance metric. So now for those in the room, I hope that you'll join the executive team and I downstairs in Exchange Square for a casual lunch. Thank you so much for joining us here today and for joining us online, and goodbye for now. Thank you.

Thank you.