Wed Apr 8

Australia’s biggest stock exchange needs tougher competition, or we all risk paying the price

Written by Helen Bird, Industry Fellow, Corporate Governance & Senior Lecturer, Swinburne Law School, Swinburne University of Technology

Almost every Australian has a stake in how well the Australian Securities Exchange (ASX ^[1]) works. Most working adults have superannuation savings invested in companies listed on the ASX, which together are valued at more than A$3 trillion ^[2].

If you’re among the millions of members of big super funds AustralianSuper and UniSuper, those industry funds are some of the biggest investors ^[3] in the publicly listed ASX ^[4] itself. So you could also have a direct stake in the ASX too.

Yet after a decade of costly technology failures, outages and embarrassing mix-ups ^[5], an independent report ^[6] has just found the “ASX is at serious risk of falling further behind without a fundamental reset”.

Those damning findings come just weeks before the ASX is due to launch ^[7] a long-delayed replacement ^[8] for its antiquated trading technology. If that April 20 launch goes well, it could finally be a step in the right direction.

But until the ASX comes under more pressure from competitors and its shareholders, it’s hard to see that “fundamental reset” happening any time soon. Here’s why.

What the corporate watchdog found

On Thursday, as Australians were packing up for their Easter holidays, corporate regulator the Australian Securities and Investments Commission (ASIC) released the final findings ^[9] of a nine-month independent inquiry into the ASX. It didn’t hold back.

The report found ^[10] the ASX had “systemic, long-standing and deeply embedded” issues, with an “insular and defensive culture” that put short-term profits ahead of fixing well-known problems.

The report lists multiple examples. For instance, the ASX’s systems struggled to cope ^[11] with record trades in March 2020 ^[12], as investors panicked about COVID-19, followed by a full-day market outage ^[13] late that year.

There was another outage in December last year ^[14]. That came just months after an ASX mix-up ^[15] that briefly wiped $400 million off the market value of Australia’s third biggest telco, TPG Telecom.

The problems this report identifies are less about technology failures, and more about a culture of short-term fixes, at the expense of acting as long-term stewards of a stable financial system.

The ASX’s lack of competition

If there was an easy alternative for companies wanting to list on the stock market in Australia, the ASX’s issues would matter far less.

However, the profit-driven ASX has close to a monopoly over Australia’s stock market, managing 81.5% of turnover ^[17] as of end of December 2025. Its only competitor, Cboe Australia, manages the remaining one-fifth of Australian equities trading.

This week, the Canadian-owned National Stock Exchange of Australia (NSX ^[18]) announced it wants to become a rival ^[19] to the ASX and Cboe Australia.

More competition would be very welcome. Yet it’s hard to see the ASX’s dominance being challenged anytime soon.

ASIC’s report highlights just how unusual it is have so little competition in the absence of direct government control.

In North America and much of Europe, the market is bigger, so there’s more competition between stock exchanges ^[20]. The report found ^[21] this “tends to lead to more competitive service quality”.

Across much of Asia, stock exchanges are more likely to be government owned or controlled, meaning “public interest is often prominent in how they operate”. Yet, as the report concluded ^[22]:

Australia is different. ASX faces little competition and there is no major government ownership stake or board representation. It has, therefore, evolved with fewer constraining influences on the way its market infrastructure is operated compared with other jurisdictions

The report found the ASX has put delivering high shareholder returns ^[23] to its own ASX Limited shareholders ahead of investing in the technology and people needed to run a consistently reliable stock exchange.

Beyond new tech, investors need to demand change

Over the next two months, expect to see some big changes at the ASX.

First, on April 20 ^[24], the ASX expects to begin launching its replacement “clearing house ^[25]” technology: the computer system used to manage transferring money and share ownership between buyers and sellers.

Known as the “Clearing House Electronic Subregister System” (CHESS ^[26]), if that launch goes well it could start to address the ASX’s long-running technology problems.

The ASX also needs to appoint a new chief executive officer by the end of May ^[27].

Ideally, that person would be an outsider, possibly coming from overseas, with experience from another stock exchange.

Who that new CEO is matters. But what will matter even more is how much the ASX board gives the CEO real authority to carry out genuinely transformational change – not just more short-term fixes.

Shareholders have a role to play here too. Key investors, like industry super funds AustralianSuper and UniSuper, have benefited from the ASX paying out high returns for many years.

To protect their own members’ returns in the long-run, those funds could make a real difference ^[28] by demanding the ASX finally act on this latest damning report into its culture – even if that means accepting slightly lower dividend payments from the ASX while it gets its house in order.

It’s in all of our interests for Australia’s major stock exchange to be able to cope well, especially in a crisis, without the “systemic, long-standing and deeply embedded” problems that have plagued the ASX for too long.