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Business Times
3 days ago
- Business
- Business Times
Ticker glitch, rising competition deepen woes for Australian bourse
[SYDNEY] ASX is grappling with rising regulatory pressure and intensifying competition, as shares of Australia's main exchange operator trail most of its global peers. In just two days, a bungled market announcement, a threat to its long-standing dominance and surprise expenses tied to an ongoing regulatory probe dented confidence in the exchange and heaped more pressure on chief executive officer Helen Lofthouse. Its stock tumbled 8.6 per cent on Thursday (Aug 7), the most in two years. It is a culmination of years of hitches at the ASX, including a botched technology upgrade to its clearing and settlement platform, that has led to a wide-ranging regulatory probe over failures in governance and risk management practices. Lofthouse and Chair David Clarke are facing demands for accountability over the shortcomings just as concern grows that the ASX is losing its prime position amid rising competition from rivals like Cboe Global Markets. ASX's litany of issues 'suddenly challenges its reputation,' said Jun Bei Liu, founder of Ten Cap Investment. 'For a defensive, quality, blue chip company as it used to be perceived, it's in a whole lot of trouble.' An expert panel has started work to analyse the firm's governance and risk management practices after the Australian Securities and Investments Commission and the Reserve Bank of Australia highlighted 'repeated and serious' failures. Doubts over ASX's operations have weighed on its shares. The stock is among the worst-performing global exchanges this quarter, with a 7.3 per cent drop that's outpaced only by Brazil's main bourse and India's largest commodities exchange. It's also the world's most unpopular bourse among sell-side analysts, with the lowest consensus rating on a 24-member Bloomberg Intelligence gauge of security and commodity exchanges. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Several developments this week have added further caution towards the stock. On Wednesday, ASX incorrectly cross-referenced TPG Telecom's ticker to a statement from Infomedia about a deal with private equity firm TPG Capital Asia, sparking investor confusion that sent shares of the Australian telecommunications company sliding. ASX cancelled early trades in TPG Telecom's stock and said the problem was caused by 'inadvertent human error.' 'ASIC has engaged with the ASX about the TPG Telecom error,' a spokesperson for the regulator said in a statement. 'ASIC has requested the ASX to identify action to prevent issues such as this occurring again.' Later that day, ASIC said it was in the final stages of considering a listing market application from Cboe's Australian unit. The move would allow domestic companies to list on an exchange run by the US rival, threatening to end ASX's local market domination. Competition coming Unlike some countries, Australia is not home to multiple listing platforms. ASX, formed in 1987 after legislation enabled the union of six independent stock exchanges that had operated in the states' capital cities, is currently the only venue for public listings. In 1998, it became the first exchange in the world to demutualise and directly list itself. It now has a market capitalisation of about A$12.5 billion (S$10.5 billion) after shrinking by around a third from its all-time high in 2021. Singapore Exchange's attempted takeover of ASX was blocked in 2011, with the government at the time citing national interest reasons. Since then, while equities trading began on Chi-X before it was bought by Cboe, ASX has maintained a stronghold of public listings and on the lucrative derivatives market. If approved, Cboe's bid would 'enhance competition and attract foreign investment, providing more choice for investors and greater international alignment,' ASIC said in a statement on Wednesday. Cboe Australia currently provides trading in ASX-listed securities and admits exchange-traded products through its own market. India offers an example of how a dominant exchange can be disrupted by a new entrant. BSE, once the nation's leading stock exchange, saw its market share rapidly decline after the launch of the National Stock Exchange of India in 1994, which introduced electronic trading. Institutional investors quickly migrated to the NSE, drawn by its modern technology. As a result, BSE, once the pre-eminent player, now holds only a single-digit share of the cash equities market. Lingering concerns Meantime, ASX CEO Lofthouse has pledged a revamp that would lift standards and support the long-term interests of the nation's financial markets. Still, costs are mounting and the bourse on Thursday said it would incur as much as A$35 million in additional operating expenses related to the panel-led inquiry that's due to report to ASIC by the end of March. The firm is due to deliver full-year earnings results on Aug 14. While these are one-off fees, 'we think this could lead to additional operational and risk management spend beyond' the current fiscal year, Morgan Stanley analysts led by Andrei Stadnik wrote in a note. BLOOMBERG
Sydney Morning Herald
3 days ago
- Business
- Sydney Morning Herald
Runners of the week: Rhythm Biosciences, Roolife, Waratah & Lindian
It was a big week for Australian resources on the exchange. As iron ore pushed above the US$100 (A$150) per tonne mark and gold held near all-time highs, the blue suits and RM Williams boots of corporate resources descended upon Kalgoorlie's annual Diggers and Dealers forum. Despite the seemingly incessant needs of gold CEOs to reach into their pockets to compare free cash flow charts, it was the unlikely rare earths sector that stole the show. Federal Resources Minister Madeleine King suggested at Diggers on Tuesday that Australia might follow the United States in setting a price floor for magnet rare earths production Down Under. The announcement was quickly followed by Iluka Resources, which is constructing a government-funded refinery in Geraldton in Western Australia's Mid West, announcing it would fork out $32 million for a slice of critical rare earths supply from one of this week's Runners. The all-seeing, all-knowing market overlords at the ASX were in hot water this week, after the market operator mistakenly mixed up the $10 billion Aussie internet service provider TPG Telecom with US-based TPG Capital Asia. Amid an ongoing investigation into persistent governance and operational issues, the almighty ASX exacerbated its problems by mistakenly claiming, without clarification, that TPG Telecom was acquiring a software developer, when the acquisition was being made by TPG Capital Asia, a private equity firm. TPG telecom stock went into a trading pause, causing mass confusion and volume losses, before the ASX came out and said 'nothing to see here', 'carry on as you were'. All trades from the morning's open were cancelled, while TPG lost $400 million off its intraday market valuation. The massive operator gaffe follows pressure by Australia's watchdog ASIC, investigating misleading clearing advice by the ASX, which could lead to the operator losing its monopoly status in Australia, just as encroaching US sharks' circle. Perhaps surprisingly, this week's Bulls N' Bears ASX Runner of the Week wasn't taken out by a resources company on Diggers week. Rather, a biotech hopeful continued a string of biotech and AI company dominance of late, with impressive results from its cancer screening technology.
The Age
3 days ago
- Business
- The Age
Runners of the week: Rhythm Biosciences, Roolife, Waratah & Lindian
It was a big week for Australian resources on the exchange. As iron ore pushed above the US$100 (A$150) per tonne mark and gold held near all-time highs, the blue suits and RM Williams boots of corporate resources descended upon Kalgoorlie's annual Diggers and Dealers forum. Despite the seemingly incessant needs of gold CEOs to reach into their pockets to compare free cash flow charts, it was the unlikely rare earths sector that stole the show. Federal Resources Minister Madeleine King suggested at Diggers on Tuesday that Australia might follow the United States in setting a price floor for magnet rare earths production Down Under. The announcement was quickly followed by Iluka Resources, which is constructing a government-funded refinery in Geraldton in Western Australia's Mid West, announcing it would fork out $32 million for a slice of critical rare earths supply from one of this week's Runners. The all-seeing, all-knowing market overlords at the ASX were in hot water this week, after the market operator mistakenly mixed up the $10 billion Aussie internet service provider TPG Telecom with US-based TPG Capital Asia. Amid an ongoing investigation into persistent governance and operational issues, the almighty ASX exacerbated its problems by mistakenly claiming, without clarification, that TPG Telecom was acquiring a software developer, when the acquisition was being made by TPG Capital Asia, a private equity firm. TPG telecom stock went into a trading pause, causing mass confusion and volume losses, before the ASX came out and said 'nothing to see here', 'carry on as you were'. All trades from the morning's open were cancelled, while TPG lost $400 million off its intraday market valuation. The massive operator gaffe follows pressure by Australia's watchdog ASIC, investigating misleading clearing advice by the ASX, which could lead to the operator losing its monopoly status in Australia, just as encroaching US sharks' circle. Perhaps surprisingly, this week's Bulls N' Bears ASX Runner of the Week wasn't taken out by a resources company on Diggers week. Rather, a biotech hopeful continued a string of biotech and AI company dominance of late, with impressive results from its cancer screening technology.
West Australian
3 days ago
- Business
- West Australian
Runners of the week: Rhythm Biosciences, Roolife, Waratah & Lindian
It was a big week for Australian resources on the exchange. As iron ore pushed above the US$100 (A$150) per tonne mark and gold held near all-time highs, the blue suits and RM Williams boots of corporate resources descended upon Kalgoorlie's annual Diggers and Dealers forum. Despite the seemingly incessant needs of gold CEOs to reach into their pockets to compare free cash flow charts, it was the unlikely rare earths sector that stole the show. Federal Resources Minister Madeleine King suggested at Diggers on Tuesday that Australia might follow the United States in setting a price floor for magnet rare earths production Down Under. The announcement was quickly followed by Iluka Resources, which is constructing a government-funded refinery in Geraldton in Western Australia's Mid West, announcing it would fork out $32 million for a slice of critical rare earths supply from one of this week's Runners. The all-seeing, all-knowing market overlords at the ASX were in hot water this week, after the market operator mistakenly mixed up the $10 billion Aussie internet service provider TPG Telecom with US-based TPG Capital Asia. Amid an ongoing investigation into persistent governance and operational issues, the almighty ASX exacerbated its problems by mistakenly claiming, without clarification, that TPG Telecom was acquiring a software developer, when the acquisition was being made by TPG Capital Asia, a private equity firm. TPG telecom stock went into a trading pause, causing mass confusion and volume losses, before the ASX came out and said 'nothing to see here', 'carry on as you were'. All trades from the morning's open were cancelled, while TPG lost $400 million off its intraday market valuation. The massive operator gaffe follows pressure by Australia's watchdog ASIC, investigating misleading clearing advice by the ASX, which could lead to the operator losing its monopoly status in Australia, just as encroaching US sharks' circle. Perhaps surprisingly, this week's Bulls N' Bears ASX Runner of the Week wasn't taken out by a resources company on Diggers week. Rather, a biotech hopeful continued a string of biotech and AI company dominance of late, with impressive results from its cancer screening technology. RHYTHM BIOSCIENCES LIMITED (ASX: RHY) Up 250% (6c – 21c) Bulls N' Bears' Runner of the Week is Rhythm Biosciences, which took a while to get going this week following the release on Monday of the results of a study of the company's simple predictive blood test for colorectal cancer, called ColoSTAT. The company says its study confirmed the test's effectiveness across all cancer stages, a critical step on its commercialisation pathway. The trial of 300 patients' blood samples showed ColoSTAT consistently detected colorectal cancer, from its early to late stages. Rhythm received its first batch of ColoSTAT kits from partner Quansys Biosciences, produced using the final manufacturing process expected in the product's rollout. Colorectal cancer is the second-leading cause of cancer deaths globally, but is curable if caught early. The company says ColoSTAT's performance meets clinical requirements for a screening test for patients experiencing bowel cancer symptoms, potentially placing it as a serious alternative for people who can't or don't want to use existing screening programs. After failing to fire on Monday, Rhythm's share price rocketed on Wednesday, hitting a peak of 21 cents a share from last week's 6c close, up 250 per cent. Rhythm is now gearing up for final validation of its test kits and a submission to the National Association of Testing Authorities. It has further studies pending. If ColoSTAT clears these hurdles, this biotech minnow could help rewrite the script on cancer screening. After a failure to launch its product in early 2023 - and its share price this week - the company's commercialisation hopes look back on track to address a seriously sizeable cancer screening market. ROOLIFE GROUP LTD (ASX: RLG) Up 225% (0.4c – 1.3c) Snagging silver on the week is e-commerce player RooLife Group Limited, which bounded up the bourse on Wednesday after inking a blockbuster partnership supply agreement with Eternal Asia Supply Chain Management. The deal tasks Roolife with sourcing health, wellness and food and beverage products for Eternal Asia's massive network across more than 320 cities, one million retail outlets and more than 100 Fortune 500 clients in China. Roolife says the deal could lead to potential orders worth up to CNY500 million (A$110 million) a year, although volumes will depend on pricing and Roolife's capacity to fulfill them. It opens a direct pipeline to China's general trade retail market, bypassing tedious traditional brand-building costs. The company, which leverages data-driven platforms to target high-growth markets such as China, South East Asia and India, says it is already receiving product order requests, putting it well on its way to hitting the big leagues. The news lit a fire under Roolife's share price, which skyrocketed 225 per cent on Wednesday to 1.3c from 0.4c last Friday on $2 million in stock traded. With its intelligent e-commerce engine powered by Eternal Asia's demand data, Roolife believes it is poised to lock Australia's producers into one of the world's largest retail economies. If it can secure binding orders and continue to scale supply, this digital services dynamo could be on track for a massive retail breakout. WARATAH MINERALS LIMITED (ASX: WTM) Up 136% (29.5c – 69.5c) Taking the final podium spot this week is the no-longer junior explorer Waratah Minerals, which was the toast of Diggers' first day when the company unveiled a massive discovery at its Spur gold-copper project in the East Lachlan Fold region of New South Wales. An almighty drill hole at Spur confirmed the company's gold corridor potential to host a large-scale, high-grade gold system, just 5 kilometres from Newmont's 50-million-ounce Cadia Valley mine, NSW's answer to the Kalgoorlie Super Pit. Assays from the deep diamond hole returned a mammoth 208.7-metre intersection grading 1.17 grams per tonne (g/t) gold from 514m, including 38m at 3.61g/t from 665m. Visible gold vein swarms extend its surface mineralisation to more than 500m below surface. The results extended the Spur corridor strike by more than 500m, to more than 1.5km. Drilling at the company's Consols, Essex, and Thistle zones uncovered high-grade porphyry potential, like the mineralisation at Cadia. After the staggering discovery, Waratah expanded its program by 60 holes to test the system from surface to 450m depth, aiming to connect Spur to its nearby Dalcoath and Essex prospects. The company's share price continued to surge all week, moving up 136 per cent to 69.5c Friday, from 29.5c last week, before taking a little breather to end the week. These porphyries are NSW's golden giants and the new discovery is no small feat. Given the significance of the state's last porphyry discovery by Alkane Resources in 2019, it won't be surprising to be talking about Waratah's discovery again in seven days' time. LINDIAN RESOURCES LTD (ASX: LIN) Up 50% (10c – 15c) Riding the rare earths wave to scoop up this week's final Runners' spot is Lindian Resources, after it sealed a 15-year strategic offtake deal with Aussie major Iluka Resources, which includes $32 million in construction funding. The deal locks 6000 tonnes per year of rare earth monazite concentrate from Lindian's Kangankunde project in Malawi into Australia's latest Eneabba rare earths refinery in Geraldton. Lindian's seismic deal cements Kangankunde as one of the pre-eminent rare earth developments on the planet and comes as Iluka scrambles to lock in a non-Chinese rare earths supply. The project's monster 261-million-tonne resource is grading at 2.19 per cent total rare earth ore, with an ore reserve at a higher 2.9 per cent, and is slated to last 45 years of mining. The partnership looks a masterstroke for both parties. Kangankunde is well on its way to first production, expected by next year, while Iluka's Eneabba refinery is set to become Australia's first fully integrated, government-backed rare earths facility. Commissioning is slated for 2027. The stock shot out of a cannon on Wednesday's announcement, moving up a substantial 50 per cent from last week, to a 15c high on some $5.2 million in paper changing hands. For the first time in a long time, this week has revealed what could be a very concerted effort by the federal government to build a subsidised resources sector. By replicating the US in setting potential floor prices for local rare earths, Australia could finally grow a fully-fledged vertically integrated rare earths supply chain backed by the government. Is your ASX-listed company doing something interesting? Contact:
ABC News
4 days ago
- Business
- 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.
