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Sky News AU
2 hours ago
- Sky News AU
ASX plunges more than 8 per cent on Thursday following TPG blunder
Sky News Business Reporter Edward Boyd says the Australian stockmarket operator got smashed today – following the TPG blunder yesterday as it dropped more than 10 per cent at the open. 'The ASX also revealed this morning that it expects the ASIC inquiry is going to cost roughly $25 to 35 million dollars during the new financial year, to pay for things like legal expenses, additional resourcing and the establishment of a secretariat,' Mr Boyd said. ASX Limited finished down more than 8 per cent on Thursday.
Perth Now
2 hours ago
- Perth Now
ASX dips as investors take profits
Investors have made hay on the Australian sharemarket following Wednesday's record high, cashing out and pushing the bourse down on Thursday. The ASX200 remained in uncharted territory above 8800 points though, closing for a daily loss of 12.3 points or 0.14 per cent at 8831.4. The broader All Ords lost 0.1 per cent to 9102 points while the Aussie dollar lifted above US65 cents, hitting 65.22 cents. Red numbers flashed for six of the ASX's 10 largest health care stocks, dragging the sector to be the weakest performer with a 1.2 per cent loss. Behemoth CSL lost 1.5 per cent (at $265.53) while Resmed and TELIX Pharmaceuticals lost 2 per cent each as well. Reusable pallets and crates firm Brambles flattened out following its all-time high in July, shedding 3.3 per cent (at $23.31) to be among the main backsliders on the industrials sector, which as a whole lost ground. Across the board, five of 11 sectors were in the red. Eyes will be on RBA Governor Michele Bullock on Tuesday, for an almost-guaranteed cut to the cash rate. NewsWire / Nikki Short Credit: News Corp Australia With a reduction in the cash rate next Tuesday looking certain, markets are split on whether it will be a 0.25 or 0.5 point cut. Home Loan Experts chief executive Otto Dargan says the RBA is teetering toward hard landing territory. 'The global bond markets are already pricing in emergency cuts, and with the equity crash in early April rattling confidence, the RBA has no choice but to get ahead of the curve,' Mr Dargan said. 'This isn't about inflation anymore, it's about restoring stability and avoiding a credit crunch. 'Borrowing power is still strangled, buyers have equity but can't service, and the RBA knows a slow response now risks turning a soft landing into a hard one.' Investors continue to seek the safe haven of gold, with the ASX All Ords Gold benchmark up 39 per cent this calendar year. Rebecca Le May Credit: NCA NewsWire Real estate stocks were a key driver for the record high ASX200 close on Wednesday, and the sector was locked and loaded, Mr Dargan said. 'If there is another (interest rate) hold, it'll be for optics, but rate cuts are coming before Christmas. The real story is how quickly lenders will pass these on to borrowers, and how that will ignite property markets already itching for a rebound.' Expectations of rate cuts buoyed consumer stocks to make major gains on Thursday. JB Hi-Fi added 1.8 per cent (at $116.41) and is 74 per cent up over the past year. Heavyweights Aristocrat Leisure (up 1.5 per cent at $71.38) and Eagers Automotive (up 2.2 per cent at $20.60) pulled the discretionaries sector deep into the green on the day. The sector's seven most valuable stocks are all well into double digit gains across the past 12 months. Wesfarmers was in on the act, with this week's gains pushing the company above $100bn market cap, joining the big four and CSL as 'hectocorns'. There were serious rumblings for sharemarket operator ASX Ltd, as its price sank 8.6 per cent to $64.22. US competitor CBOE is pushing to conduct sharemarket listings of companies in Australia.
ABC News
3 hours ago
- ABC News
ASX faces losing virtual monopoly as TPG bungle adds to a decade of woes
There's a limit to tolerance. Just ask Helen Lofthouse, the chief executive of ASX Ltd, the company that operates the national stock and securities exchange. Her job, and the future of the organisation is now under a cloud, after the events of the past week. On Wednesday, the ASX confused a listed company with a similarly-named foreign owned private equity group that was engaged in a huge takeover. The mistake resulted in TPG Telecom shares plummeting 5 per cent, wiping $400 million from its market value, even though it had nothing to do with the $645 million takeover of automotive software group Infomedia. If the original mix-up was bad, the inability of the ASX to rectify the situation turned it into a debacle, as traders pounded TPG Telecom's stock for hours. And it's unlikely to be the last the operator hears from TPG, with the telco understood to be considering its legal options. As the disaster was unfolding, Treasurer Jim Chalmers was hosting a group of investment heavyweights in Canberra in the lead-up to the Economic Reform Roundtable in a fortnight. Among those attending was Joe Longo, chair of the Australian Securities and Investment Commission (ASIC), a man whose patience with the ASX long ago reached an end. Longo dropped a bombshell. The regulator, he told the meeting, was "in the final stages" of allowing a competitor to enter the market and do away with the ASX's virtual monopoly over securities trading. In particular, he told the gathering, it had been in talks with Cboe Australia, the local offshoot of the Chicago-based financial trading giant which already trades ASX-listed securities through its own market. "As superannuation funds grow and investors seek opportunities, our actions will help keep our markets efficient, innovative and attractive, supporting economic growth for all Australians." The timing may have been purely coincidental, but the intent had been brewing for years as investor anger and frustration with the ASX reached tipping point. ASX Ltd, the operator of the ASX, is listed on its own exchange. As the news sank in on Thursday that it may be stripped of its monopoly, ASX shares tanked. After a near-1 per cent fall on Wednesday as the TPG Telecom disaster unfolded, the stock dived almost 9 per cent on Thursday. In a statement, chief executive Ms Lofthouse said the ASX "is supportive of competition that contributes to strong and effective capital markets in Australia" and talked up the interest it was receiving from companies considering a listing. In 2015, the ASX began scouting for a replacement to the ageing technology it used to settle trades on the exchange. Two years later, it created global headlines. In a market abuzz with talk of cryptocurrency and its open source ledger system, the ASX announced it would build the world's first industrial scale blockchain for financial services applications. The timeline was always ambitious. It was supposed to be online by 2020. But the project became ever-more complex as fights developed between various information providers about how they would interact with the new system. Shares do not simply change hands between buyers and sellers — there are share registries, custodians and a host of other players, many of whom became concerned the new system would steal their business. By the time the fifth delay to the rollout time was announced, it was obvious the project was on the rocks. At the end of 2022, it was canned, forcing the ASX to announce a $250 million write-off. Brokers and investment houses had spent vast amounts too, replacing their systems to integrate with the blockchain dream that ultimately turned into a blocked drain. Dominic Stevens, the ASX chief executive who commissioned the project, had left at the start of the year, leaving then chair Damian Roche to clean up the mess and to appoint Accenture to independently review what had gone wrong. "On behalf of ASX, I apologise for the disruption experienced in relation to the CHESS replacement project over a number of years," he said at the time. Given it is such a key component of Australia's financial infrastructure, the exchange is overseen by ASIC and the Reserve Bank of Australia. Then-RBA governor Philip Lowe and ASIC's Joe Longo were both appalled at the ineptitude and made little attempt to disguise their feelings. "The independent report has found significant gaps and deficiencies in ASX's program delivery capabilities and that there are significant challenges in the technology design," Mr Longo said shortly after the Accenture review was released. The decision to abandon the new settlement program left the ASX with an even bigger headache. The patched-up 25-year-old CHESS system was long past its use by date, and the ASX was back to square one on a replacement. Despite all the talk about using bits and pieces of the abandoned blockchain system, there's no firm date on a replacement, even after repeated outages that have led to a series of embarrassing shutdowns. The most recent, and among the worst on record, was on the Friday before Christmas last year when brokers couldn't settle trades, leading to this outburst from Mr Longo. "I am very concerned about it. Very disappointed. And from a regulatory perspective, everything is on the table," he told the Australian Financial Review. "We went after the ASX twice last year, and you know what? It's probably going to happen again this year," he told the Nine publication. In March, the corporate regulator ASIC and the Reserve Bank issues a joint letter rebuking the exchange operator, describing "deep concerns". By June, ASIC had launched a sweeping investigation, citing "ongoing concerns over ASX's ability to maintain stable, secure and resilient critical market infrastructure". "ASIC's decision to initiate an Inquiry follows repeated and serious failures at ASX," Mr Longo said in the announcement. He foreshadowed the regulator's drive to increase competition. On Thursday, as ASX Ltd's shares languished on the news of ASIC's looming approval of Cboe, the company quantified the cost of the regulator's probe. It forecast additional operating costs of between $25 million and $35 million in the financial year ahead, as a result of legal and other costs to manage its response. This week's embarrassment is understood to have been caused by human error rather than creaking computer technology. But the error was compounded by poor oversight and a series of management mistakes. Around 9:20am on Wednesday morning, a little-known technology group Infomedia announced it had accepted a $640 million takeover from an unlisted private equity firm, TPG Capital. Someone at the ASX linked the announcement to Australia's third-biggest telecommunications group, TPG Telecom. While unacceptable, the mistake is understandable. What happened next was inconceivable. Both TPG Telecom and Infomedia notified the ASX within minutes, offering themselves to correct the record. The ASX refused, telling both parties it would handle the correction. Not only did it delay any correction, it lifted the trading pause in TPG at 9:47am without any clarification. When the market opened 10 minutes later, TPG Telecom shares crashed. TPG executives and staff repeatedly demanded urgent action but the stock trading wasn't halted until around 10:15am and the announcements remained in place until 11:15am. A formal correction wasn't issued until 11:31am. ASX boss Helen Lofthouse has apologised. But she may be too late.
