ASX posts AU$250m after-tax H1 profit as it builds the 'exchange for the future'

The ASX also said its blockchain-based CHESS replacement project is on-track for industry-wide testing in July.

The Australian Securities Exchange (ASX) has ended the first half of FY2020 with AU$250 million in after-tax profit, on revenue of AU$546 million.

Revenue was comprised of almost AU$114 million from listings and issuer services; AU$159 million from derivatives and OTC revenue; trading services revenue accounted for AU$125 million, AU$53.5 million came from information services and AU$43.6 million from technical services; and equity post-trade operating revenue for the six-month period totalled AU$58.6 million.

Operating expenses came in at AU$114.4 million. Included in that figure, equipment costs increased by 5% to AU$16 million, with the exchange noting this was mostly due to additional licence subscriptions for cybersecurity and digital domain initiatives.

"We are investing in the long-term sustainability of our business by strengthening our technology, risk and governance foundations, and upgrading our operating and service capabilities to support growth opportunities," ASX CEO Dominic Stevens told shareholders on Thursday.

Expenditure also included the continued investment in distributed ledger technology (DLT) for the ASX's CHESS replacement project, ASX Trade platform upgrades, as well as various initiatives to "strengthen resiliency of ASX services, by continuing to contemporise platforms". CHESS, Stevens said, is on track to open to the industry-wide test environment in July 2020

Read more: Here's what to expect from ASX's blockchain-based CHESS replacement

Investments were up AU$23 million on the prior year, which included the exchange claiming an 8.3% shareholding in Digital Asset Holdings LLC -- the company charged with helping ASX with CHESS.

The ASX pumped an additional $10 million investment into Digital Asset, and also made a $3.9 million convertible note to equity conversion payment.

"ASX has never been busier," Stevens said during the organisation's results call. "We're making long term investments in the future of our core underlying franchise by improving the management of enterprise risk, enhancing our risk culture, and we're undertaking a significant contemporisation of the technology stack here.

"We're also enhancing our products and services … with an eye to customer value. And finally, we're investing in adjacencies that have the ability to produce significant revenues over the medium term."

Touching on CHESS, Stevens said the project remained on track for industry-wide testing in July.

"This project is significant to the ASX, to the industry, and to the nation," he said.

"We understand that replacing a complex and sophisticated 26-year-old system is a major undertaking for the industry, but it needs to be done.

"We're very excited about the long term benefits this can bring to clearing and settlement specifically, and to the efficiency of the securities industry in Australia generally."

The ASX also expanded its head count in the first half, from 632 to 701.

For the 2019 financial year, the ASX reported statutory net profit after tax of AU$492 million, on revenue of AU$863.8 million.

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