This month marks two years after you became CEO of ASX. How have the first 24 months gone, and how are you adjusting to the role?
It’s certainly been a busy time and a rewarding one, given how much has been achieved. When I started in August 2016, my initial focus was to re-define ASX’s strategy. Part of that work explored where the industry might be in 10 years’ time and the role ASX would play in that future.
I also looked at how we could improve our risk management capability – critical for all financial market infrastructure providers. This was always going to get my keen attention because much of my career had been based in this area.
I also needed to understand our strategy for technology, because it was clear that technology was profoundly changing our industry with innovations like Artificial Intelligence (AI), the cloud and distributed ledger technology (DLT).
Most importantly, we recognised the need for balance between pursuing our growth initiatives and strengthening our core ‘licence to operate’ activities. Our success will not be based on profitability or market share alone. How we manage our operational reliability and resilience, maintain the trust of our customers, and act with integrity towards all our stakeholders are also critical to our success.
In that time you have implemented a strategy focused on strengthening ASX’s foundations, a large part of which is about decommissioning old infrastructures and building new systems, including the CHESS/DLT project. Can you update us on these initiatives, please?
We are building stronger foundations for the future by investing in new and contemporary technology today.
We’re making good progress. We’ve replaced our SYCOM futures trading platform, and are upgrading our secondary data centre, consolidating our ASX Net communications system and moving towards the implementation stage of replacing our CHESS equities post-trade system with DLT.
ASX is leading the exchange world with this project, and we are excited about the ways we believe a DLT-based system will make doing business easier for customers. This should include improving record keeping, reducing reconciliation costs, enabling more timely transactions and generating better quality ‘source of truth’ data. Beyond this, we expect a DLT system will stimulate product and service innovation across the industry in ways we can’t conceive today.
ASX will shortly release its response to the latest round of consultation on the scope and implementation roadmap, which is expected to see the new system go-live between Q4 2020 and Q1 2021, subject to stakeholder readiness and regulatory clearance.
This continues to be a multi-year project requiring significant collaboration with our stakeholders. We are very grateful for their input and support.
ASX is well known for its early adoption of DLT. Are there any other FinTech applications that you are already investing in, or see potential for in the future?
There are profound global trends affecting our intermediary customers. Since the global financial crisis, increased regulation, higher compliance burdens, lower returns and the emergence of new technologies have driven demand for financial market infrastructures, like ASX, to offer auditable electronic execution services, central counterparty clearing to reduce risk, post-trade and technical services that reduce complexity, improvements to straight-through processing, and data analytics that deliver insights to drive new revenue opportunities.
As a trusted and independent financial market operator, ASX is well-placed to offer these services. We see ASX not as a competitor to those already servicing issuers and investors, but as a supplier of infrastructure, structured data and analytics who can help these service providers innovate and grow. There is a huge opportunity, but it will play out over a number of years.
Please tell us more about your plans for the ASX listing business?
Our technology and foreign listings strategy has been successful for ASX, companies and investors. In the just completed financial year we added 21 new technology companies and 24 new foreign listings. We have strong, ongoing interest from global mid-cap companies - from the US, Europe, Israel and New Zealand - who see the benefits of listing on ASX with our single board, contemporary and flexible rules, and access to the large and sophisticated Australian capital market, which is underpinned by the growing investment funds pool valued at around A$2.6 trillion.
We also have a goal to expand the range of products we offer that give investors exposure to Australian and overseas markets through exchange-traded products and mFund. We added 27 new ETP products in FY18, bringing their total number to 228. There are over 200 products available via mFunds too.
Complementing this growth strategy is ASX’s determination to preserve and strengthen the quality and integrity of our market. This includes evolving our compliance rules and guidance, and using technology to enhance our decision-making to keep standards high.
How would you describe ASX’s role within Australia’s capital markets?
ASX operates at the heart of Australia’s financial markets. We provide critical infrastructure and technical and data services that help power Australia’s equity, debt and futures markets. We assist companies to grow, corporates to manage risk, and investors to build long-term wealth. It’s a privilege that comes with great responsibility. We work hard to earn the trust and confidence of our customers and the wider community. We seek to renew it every day through the quality, security and resilience of our activities.