Good morning, everyone, and welcome to the 2024 ASX Investor Forum. My name is Helen Lofthouse, and I'm the Managing Director and CEO of ASX. To begin, I'd like to acknowledge the Gadigal people of the Eora Nation, who are the traditional custodians of the Country where I'm speaking today. We recognize their continuing connection to the land and waters and pay our respects to Elders past and present. We extend that respect to any First Nations people who are joining us today. This is the second year that ASX has held an Investor Forum, and it gives us an opportunity to update you on our strategy and how we're focused on building sustainable shareholder value. Last year we launched a new five-year strategy, and we updated our purpose and vision.
We're now one year into that strategy, and I'd like to share the progress we've made. In terms of today's agenda, the first three sessions are designed to deliver a group-wide view of ASX, and they'll include the key wins we've had, as well as the focus areas we have for the year ahead. Following my updates, our Chief Information Officer, Tim Whiteley, will provide an update on our major technology projects and set out our technology roadmap. Then you'll hear from our Chief Financial Officer, Andrew Tobin, who'll provide a financial update, including FY25 guidance for total expense growth and capital expenditure. After a short break, we'll then return to hear from three group executives on their respective lines of business.
So, Blair Beeton, Darren Yip, and Clive Triance will each talk to you about some of the key drivers of their businesses and outline how they're thinking Technology and Data will be presented by Dickon Close, General Manager for Data and Access Products, and that follows the resignation of Dan Chesterman, the Group Technology and Data, last month. Darren spent seven years serving on the ASX executive team, overseeing continued growth in that business and embedding a team structure aimed at delivering on strategic priorities. And a search for Dan's replacement is underway, but he'll continue to support ASX over the coming weeks as the transition plan's put in place, and he's here with us today. We see tech and data as an important growth driver for us, and we want to share some growth opportunities for this business with you today.
There will be time for questions once the presentations are complete, both for those in the room and for those who are attending remotely. I'm delighted to have such a strong team here supporting me and driving our five-year strategy. At the board level, I'm also pleased to welcome Wayne Byres, whose deep financial services experience and regulatory expertise will be an asset to our organization. I also want to highlight all of the capable and committed people across our organization who are delivering on our strategic vision and living our values every day. I'll move now to the strategy section of today's presentation. I want to start by reiterating the high quality of ASX's businesses, the strength of our offering, and the structural tailwinds that support us.
I'll then talk about our value chain, which is about how we support our customers and our various stakeholders throughout the market life cycle in a cohesive way. Next, I'll update you on our progress against our five-year strategy, including our progress in FY24 and our focus areas for FY25. I'll finish by talking about the current operating environment and outlook. It's worth starting with the strategic differentiators that are fundamental to ASX and which drive shareholder value. Our purpose is to power a stronger economic future by enabling a fair and dynamic marketplace for all. This really reflects ASX's position at the center of Australia's financial markets and the crucial role that we play in supporting the economy and financial system stability.
We do this through our high-quality portfolio of businesses, which provide diverse revenue streams that together deliver resilient revenue performance throughout market cycles. We've built these businesses over a long period during which ASX has established leading positions in multiple markets. Our offering's compelling for customers, and it positions ASX with the ability to play an important role throughout the market life cycle. The quality of our businesses and the benefits of our diversified business model are demonstrated by the delivery of record revenue in the first half of FY24 for a first half, despite challenging market conditions, particularly in equity markets. What we do matters. ASX is at the heart of the Australian and New Zealand financial markets, and we work to support them and improve their quality.
Of course, within this, we also need to serve the needs of our diverse customers, including investors, brokers, banks, alternative trading venues, share registries, and of course, issuers. It's our role to create value for them across the transaction life cycle. Public markets play a crucial role in enabling the efficient allocation of capital in our economy. For many customers, our value chain begins with raising capital, which we facilitate across different asset classes, including equities and fixed income. For trading, we operate deep secondary markets with the largest and most accessible pool of liquidity for Australian and New Zealand markets. We operate cash and derivatives markets across multiple asset classes, all the way from ETFs and individual stocks that are fundamental for individuals to the largest interest rate market in Asia Pacific.
We offer a fair, orderly, and transparent market with broad access, which in turn drives price transparency and liquidity. Our clearing houses are fundamental to the financial system stability and provide a secure and efficient mechanism to facilitate key financial market transactions. They're an important driver of liquidity because they enable all market participants to transact together. Our settlements, payments, and register platforms support the safe, fair, and effective exchange of financial instruments. We also offer unmatched access and connectivity by facilitating interaction across Australian financial markets at the right speed and resilience for our customers. All of these activities together allow us to be the source of truth provider of timely and easy-to-consume financial market data and insights, which can add value for our customers. Overall, our customers benefit from our deep liquidity and unmatched connectivity and how we bring local and global customers together.
We operate markets where people can share risk and reward securely and where everyone can benefit from a level playing field. The efficiency our value chain can provide our customers is unique in terms of connectivity, risk management, and capital utilization. Of course, strategic focus area for us is to ensure that we respond to the needs of our customers throughout the market life cycle. As participants in the broader market, our shareholders can also see the benefit of this value chain and getting the settings right, which creates value for our stakeholders across the markets in which we operate. Now I'd like to focus on the structural tailwinds for ASX. I've spoken about these before, but it's worth repeating as these enduring macro trends combined with our value chain will drive our long-term growth.
These tailwinds provide a critical foundation upon which we're developing the growth opportunities for our business units, as we believe that leveraging these will unlock further value. Australia has the fifth largest pension system in the world, which is a key part of a growing Australian capital base and will continue to drive activity across our markets. For example, this capital base is a key differentiator for our listings business, as it attracts issuers from other parts of the world to list on ASX. Blair Beeton, our Group Executive of Listings, will give more detail on this in his presentation shortly. There's ongoing growth in demand for data, reflecting the increased role in technology in our markets. We're a data-rich environment, and we've been exploring further ways to unlock more value from the data that we hold.
So, you'll hear more about these growth opportunities in the presentation Technology and Data business. ASX supports sustainability in all its forms, and our markets have an important role to play in facilitating the transition towards Net Zero emissions by providing key products, connectivity, liquidity, and price transparency. Our markets team are working with our customers and stakeholders in developing products designed to support their journey to Net Zero. Darren Yip, our Group Executive of Markets, will provide some more detail on some aspects of this in his presentation shortly. Public markets play a crucial role in supporting financial system stability and the broader economy. We enable price transparency and valuation integrity, creating a level playing field with fair access for all, and that facilitates liquidity. We're trusted, reliable, and highly regulated.
We're a neutral third party with unmatched connectivity here in Australia, as well as connecting Australia to the rest of the world. This uniquely positions us to address complex challenges for the market and to meet the needs of our customers. While the quality of our businesses, the strength of our value chain, and the structural tailwinds are the future growth drivers of ASX, we do need to be clear about where we are today. We're one year into our five-year strategy and still Horizon One. this means the majority of our effort and investment remains focused on Great Fundamentals, strategic pillar of our business. We have more to do to ensure that we're protecting long-term shareholder value and positioning ourselves to capture future growth opportunities. This means we're deliberately prioritizing the majority of our investment into Great Fundamentals, strategic pillar.
We're focused on growth as well, and we are making good progress Horizon One, which is allowing us to selectively consider Horizon Two growth opportunities. The leaders of each of our businesses will set out their thinking on growth in their presentations. While it's too early for us to provide the size of the potential revenue opportunities, it will give you an insight into the way that we're thinking about growth at the moment. We believe that these opportunities will leverage our quality businesses and strong market positions, capturing opportunities that are presented by our structural tailwinds. One question that I often get asked about is our acquisition strategy. Although this isn't a current priority for us, growth in Horizon Two could also include the acquisition of adjacent capabilities should the right opportunities arise.
As part of our investment in Great Fundamentals, strategic pillar, we set out two key focus areas: regulatory commitments and technology modernization. These remain key for us in FY25, as they're crucial to protecting long-term shareholder value. Regulatory commitments is about our role in promoting financial system stability through the licenses that we hold and the markets that we operate. We have two market licenses and four clearing and settlement licenses. We also hold a benchmark administration license, which allows us to administer the Bank Bill Swap Rate. These licenses are crucial to ASX, and they support the value chain that I spoke about earlier. We've made good progress in the past year in meeting our regulatory commitments.
This time last year, I showed you a slide with a long list of deliverables for FY24 in this area, all of which I'm pleased to say were delivered on time. This included three special reports to our regulators and the release of an expert report on the identification and management of intergroup conflicts. We significantly increased our stakeholder engagement around CHESS replacements by establishing a partnership program, a technical committee, and an advisory group on cash equities clearing and settlement. For FY25, we're focused on implementing the recommendations from the special reports and from our annual Financial Stability Standards assessment. This will help to ensure that we're meeting our regulators' high standards. These standards are appropriate given the special position we hold in the economy and the fact that we operate critical market infrastructure.
In March last year, ASIC informed ASX that it had commenced an investigation into oversight statements and disclosures regarding the CHESS replacement project. We're taking this investigation very seriously, and we continue to cooperate fully with ASIC. Given that this investigation is ongoing, I'm unable to make any further comments at this stage. Technology underpins everything we do, and it's crucial to shareholder value. We're undertaking a program of modernization that ensures that we continue to have resilient, secure, and sustainable technology. Given the importance of technology to the financial system, we prioritize safe implementation and safe operation. This is a multi-year program of work, which encompasses the delivery of several major projects alongside an uplift in our platforms and capability to enhance future technology development and the speed of rollouts.
We've made good progress on this during the past year, including the announcement of our new solution for CHESS replacement. And Clive Triance, the Group Securities and Payments, will update you on this shortly. FY25 is about continuing to deliver on our technology roadmap. And delivering will also support growth as we become more agile and better able to respond to our customers. Our Chief Information Officer, Tim Whiteley, will provide you with a further update, including our technology roadmap, in the next presentation. In terms of business efficiency, you'll have seen that we announced a targeted restructure at our first half results to ensure that we're prioritizing the most strategic and efficient outcomes for the group. And this restructure is balanced with the need to prioritize investment in our key focus areas of regulatory commitments and technology modernization, which I've just discussed.
We do expect to add people to support these areas. We've got further expense management initiatives in FY25, which our CFO, Andrew Tobin, will talk about shortly. We also completed our equity portfolio review, deciding to maintain our holdings in Sympli and Grow, which we believe shows significant potential in the medium term. Regulatory commitments and technology modernization are important streams of work as part of Great Fundamentals, strategic pillar. I'd like to put this in the context of our broader strategy for a moment. This slide shows our five-year strategy, which is the framework that lays out where we want to be in FY28. Our purpose reflects the critical role we play in Australia's financial system. Our vision is to be the market's choice, inspiring confidence and trust.
Each pillar provides principles to help us achieve this vision with target outcomes and actions that we're taking to drive us there. These aspirations are measurable so that we can track our progress. One ASX is about having a vibrant culture which inspires growth with accountable, empowered, and engaged teams which work in a cohesive Great Fundamentals is, as you know, driving much of the activity Horizon One of our strategy. It's having a modern technology stack which is sustainable, secure, and resilient. It's about high-quality and reliable delivery for the markets in which we operate with mature risk compliance and operating frameworks. It's about sustainable shareholder value. Customer-Driven is working effectively with our customers, solving challenges, delivering value, and focusing on market quality. Digital by Design includes making our customers' experiences with ASX easy.
We're an inherently complex business, which is okay, but we aim to eliminate unnecessary complexity. Our digitization journey includes collecting and delivering high-quality data to drive value for customers. So, what are we doing in FY25 to progress our journey towards our FY28 strategic outcomes? As we come towards the end of our lease in our current head office here in Sydney, we've had the opportunity to consider our building strategy to make sure that we have the right space to drive our business and our culture. We've made the decision to move to new offices at the end of next calendar year, which are situated in Martin Place, the center of Sydney's financial district. We're doing this because it's the right thing to do for our brand, our people, and our business.
The One ASX strategic pillar is about continuing to execute a cultural shift and improving our employee experience. The move to Martin Place next year will help to create a vibrant work environment and provide our people with the tools and technology that they need to succeed and drive overall productivity. I've already covered the regulatory commitments and technology modernization activity for our FY25 that's related to Great Fundamentals pillar. We're also targeting Net Zero, Scope one, and Scope two emissions in FY25. For Customer-Driven, we'll continue with our stakeholder engagement, which has been a real focus for me and has increased significantly over the past year. This includes industry engagement around our major technology projects, as well as listening to our customers as we carefully consider the key ways we can help them solve their problems, which will also provide growth opportunities for ASX.
You'll hear more detail about these in the other presentations today. In terms of digital by design, FY25 will see us evolve our data products and service offerings. We'll focus on enhancing our data management so that we optimize customer value through the way our data is managed, secured, and utilized. And we're also digitizing some activities for participants based on their feedback. So, we've got another busy year ahead, and I'm confident that FY25 will be another important step towards achieving our FY28 outcomes. Now, I wanted to speak to you about how we're seeing some of the key dynamics in our operating environment. A challenging macroeconomic environment, including uncertainty around inflation and interest rates, has led to a quieter IPO market and subdued cash market trading in the financial year to date.
However, we are now starting to see some activity return to equity markets with an increase in both capital raisings and trading activity over the past few months. It's important to recognize that ASX is leveraged to growth in equities, as all of our businesses are beneficiaries of any increase in equity market activity. As I said earlier, it's actually testament to our value chain and the quality and diversity of our revenue streams that we were able to report record revenue for a first half in the first half of FY 2024. The changing interest rate environment has driven a good recovery in our interest rate futures activity, the biggest driver of our futures volumes, which are up 16% in the year to date compared with last year. Calendar year 2023 was a record for 90-day Bank Bill Futures trading.
We're also continuing to see activity move further across the curve, driving volume growth. The group executives of our listings and markets businesses will talk more about these drivers of these important revenue lines for you shortly. And finally, I wanted to update you on some recent reforms to legislation that impact ASX. So, there's the competition in clearing and settlement legislation, which the government passed last year, and a declaration was made recently to specify the scope as being cash equities. We see this as the next logical step in ensuring the regulatory framework supports outcomes which are in the best long-term interests of the Australian market. It provides powers to ASIC to make rules in relation to clearing and settlement services, and it also gives ACCC the power to resolve disputes regarding access to clearing and settlement services.
More broadly, we welcome competition in clearing and settlement as we believe we provide a compelling offering. We remain focused on listening to our customers to ensure that we provide the best products and services for them, and we don't take our crucial role in supporting financial system stability lightly. The second piece of legislation is the financial market infrastructure reforms. The government's introduced a bill to implement a suite of reforms relating to the regulation of financial market infrastructure. This legislation includes amendments to provide the RBA with powers to step in and resolve a crisis at a licensed clearing or settlement facility. It also strengthens the RBA's powers to intervene to reduce the likelihood of crisis occurring. It streamlines the licensing, supervisory, and enforcement powers of ASIC and RBA in relation to financial market infrastructure, and it enhances their supervisory oversight generally.
The regulators and the government have been clear that the crisis resolution powers are designed to address very serious threats, and it's hoped that they are never needed. However, having the regime in place is important for the stability of the Australian financial system. It's expected that this bill will be passed later this year. Once passed, there'll be a process led by the RBA of developing and consulting on resolvability standards to guide resolution planning. In summing up today's strategy section of the presentation, we're one year into our five-year strategy, and we're making good progress. But we have more to do, and we're prioritizing investment and effort into our key focus areas of regulatory commitments and technology modernization to protect shareholder value.
We have high-quality businesses, a compelling value chain, and structural tailwinds to support our longer-term growth as we look forward to the next horizon of our strategy. Thank you. I'll now hand over to our Chief Information Officer, Tim Whiteley, to provide an update on our technology roadmap.
Thanks, Helen. Good morning. As Helen mentioned, I'm Tim Whiteley, the Chief Information Officer at ASX. Today, I'm going to update you on the progress we have made in the planning and delivery of our technology roadmap. Last year, I presented the technology modernization strategy and the need for ASX to not only replace CHESS, but also to deliver significant upgrades to other key technology platforms that enable ASX businesses. We can now present a more complete roadmap of the major technology changes.
I'll start by providing you with some background on the major platforms and the work we have underway to modernize them to support the markets in which we operate. This is from a scale and resilience perspective, as well as enabling us to meet the current and future needs of our customers and the broader market. Then, I'll take you through our roadmap of major projects and our integrated planning approach. Finally, I will talk to you about the track record of delivery over the past year during a time which has also seen our systems operate at historically high levels of availability. CHESS replacement has understandably been a focus for our stakeholders. This project has a unique set of challenges, including the critical importance to millions of Australians, the significant move to international standards, and the large and diverse group of stakeholders.
During the past year, we have made great progress. Industry consultation on the solution, plan, and implementation approach has progressed. Delivery of the first release is underway, and the teams from ASX, TCS, our product partner, and Accenture, our delivery partner, are working well together. The project is currently expected to deliver to plan announced in November last year. Clive will provide a more detailed update on the CHESS replacement in his presentation later today. Last year, I mentioned the need for significant upgrades or replacements of our derivatives clearing platforms. This year, we have made progress on the delivery of the OTC clearing system upgrade, with plans to implement it in FY25. This is an important upgrade to enable growth in our product capability and volumes by increasing our ability to respond to changing market and regulatory requirements. It also simplifies and modernizes the supporting technology.
The other key initiative for derivatives clearing is the replacement of the futures clearing platform. Implementing a modern market-leading platform will enable us to better deliver to the demands of our customers through improved customer experience, product uplift, and more access to data, enabling future growth. The design and implementation planning for this initiative is progressing. We are nearing the completion of the selection of a vendor platform for the replacement and have started to onboard people into our implementation team. Last year, I also talked to you about the upgrade of our trading platforms. Today, I can provide you with more detail on the trading technology roadmap and delivery plans. The trading platforms comprise a derivatives trading platform, the cash market trading platform, and the trading connectivity networks.
It is intended that both of the ASX's trading platforms and associated network infrastructure be uplifted or replaced as part of an integrated multi-year plan. ASX Trade, our cash market trading platform, is a contemporary and modern system. We have moved to a cadence of periodic service releases, delivering both customer needs and maintaining system currency. The most recent upgrade, which we call ASX Trade Service Release 14, was completed in March this year and delivered new functionality to support the industry in the event of a market outage, as well as technology upgrades. We are now moving ahead with our next update, Service Release 15, which is expected to go live around the end of FY25.
This will deliver a number of important benefits, including the removal of what is referred to as the opening auction stagger, which will seek to better align ASX with other major global exchange practices. A regular cadence of service releases is planned thereafter. It is our intention to add new features and reduce platform complexity over the next few years through ongoing service releases, which will facilitate a contemporary and resilient cash market trading platform for the future. ASX 24 is our derivatives trading platform. It will be replaced as part of a multi-year modernization strategy. In the meantime, we are planning a service release, ASX 24 Service Release four, which will deliver functional changes to support customer demand and increase technical resilience. In terms of the replacement, we are assessing potential vendors' technology solutions used by other global exchanges.
The process is still underway, and as such, the timeline is still under development. Both trading platforms are underpinned by our customer connectivity networks. These provide secure and reliable connectivity to ASX applications for all our customers. We will be upgrading our networks, including the customer endpoints, to simplify the solution for our customers and provide significantly increased resiliency. We are planning to implement these changes in alignment with the trading platform upgrades to help reduce the impact on our customers. Technology modernization is based on a combination of modern technology platforms and strong project delivery capability. Our technology modernization is founded on proven architectures and technologies. The cloud, data, and integration platforms are key capabilities to enable modern, agile, and automated technology solutions, delivering high-quality data and digital services.
This year, we have made significant progress delivering these platform capabilities, and our plan is to build out these enterprise platforms to support the delivery of the major projects. Leveraging these new platforms for the delivery of the upgrades or replacement of the key systems will help us move away from legacy technology patterns to sustainable, resilient, and future-ready architectures. Scaling our project delivery capability is also a major focus. Some of the most important elements for reliable delivery are strong planning and ongoing governance. Progress this year includes significant investment in the quality and coverage of our architecture roadmaps, our integrated delivery planning approach, uplifted project and supplier governance, as well as improved tooling and processes for monitoring ongoing progress against delivery plans.
We have also onboarded key project leadership roles to ensure we have experienced resources leading these major projects, and we have progressed partnerships with leading solution providers and delivery partners. While there is always ongoing investment in technology, this indicative roadmap shows the milestones across the major business areas that I have talked through today. The plan will be reviewed regularly to seek to ensure safe delivery of the changes and manage the impacts on market participants who we consult with on an ongoing basis. We are closely managing delivery risks with detailed planning, delivery capability uplift, and ensuring limited interdependencies between the projects. We have been demonstrating a track record of delivery over the last 12 months.
We have delivered a significant update to the cash market trading platform, delivered multiple upgrades to the existing CHESS roadmap, replaced our data center network, and delivered a number of upgrades to data services which are critical to our customers. We are also making progress on CHESS replacement release one, and the OTC clearing project is also progressing to its first production release. This year has also seen us operate our systems at historically high levels of availability. The stability and resilience of our systems is critical to the effective operation of Australia's financial markets. While the delivery of technology modernization program is essential, supporting our existing systems and safely implementing the system changes is key to our success.
The delivery roadmap has been staged to allow us to build capability and delivery confidence along the way, and the major production releases have been staggered to manage the impact of the changes for ASX and the industry participants. Delivery of the technology modernization roadmap is critical to both the resilience of the ASX technology that underpins our businesses and enabling outcomes across the ASX value chain. It will allow us to respond more quickly to our customers and create new opportunities for growth. Thank you, and I'll now hand over to our CFO, Andrew Tobin, for the finance update.
Thanks very much, Tim, and good morning to everyone. Today, I will speak to you about our guidance for total expense growth and our capital expenditure plans, followed by a recap of the capital management settings for ASX. Let's begin with total expense growth guidance.
This slide outlines our expense profile and provides guidance for FY2024 and FY2025. At our investor day last year, we guided to a total expense growth range for FY2024 of between 12% to 15%, and we expect to come in at the top end of that range. We are forecasting a reduction in our total expense base in the second half of FY2024 compared to the first half of FY2024, as we start to see the benefit of our expense management actions and reduction in our regulatory-related costs. So, turning now to 2025, we've been focused on reducing the total expense growth rate for the year ahead, which is reflected in the guidance of 6% to 9% that we are announcing today. This growth is primarily driven by ongoing technology-related costs related Horizon One of our five-year strategy, including software licensing and equipment costs.
Operating expense growth is partially offset by the annualized saving of AUD 11 million as a result of the targeted restructure announced at our interim results in February and the expected further reduction in one-off regulatory costs following the completion of special reports and other activities last year. While depreciation and amortization is expected to be largely stable in FY24 relative to FY23, we expect to see an uplift in D&A in FY25, with prior-period CapEx spend now starting to amortize as various technology systems transition into production. The increase in depreciation and amortization is included in the total expense growth guidance of 6% to 9%. However, excluding this D&A increase, we expect operating expense growth of 4% to 7% for FY25.
We remain focused on cost control, as demonstrated by our ongoing expense management actions, including the realized savings from our targeted restructure and the lower FY25 expense growth guidance that we have announced today. While we don't provide expense guidance beyond the next year ahead, operational efficiency is a key driver for us as we aim to generate sustainable shareholder value. We will maintain focus on expense management initiatives in FY25, including optimizing our workforce mix, process simplification and automation, and strategic procurement. Now, turning to capital expenditure, we expect to end FY24 with capital expenditure of approximately AUD 135 million, which is within our guidance range provided last year of AUD 110 million to AUD 140 million.
This reflects total CapEx spend of approximately AUD 85 million in the second half of 2024, up from AUD 50 million in the first half of 2024, with the main drivers being that the CHESS replacement project moved into delivery mode over the last six months alongside the trading and derivatives clearing projects. As you just heard from Tim, we have a significant technology modernization program ahead, which is reflected in our FY25 capital expenditure guidance. This includes a further increase in activity for CHESS replacement, as well as in the trading and derivatives clearing projects. As a result, we are announcing today that our technology CapEx guidance for FY25 is between AUD 160 million and AUD 180 million. These projects have multi-year delivery profiles. Therefore, we expect our CapEx spend to remain elevated through to FY27 to support our technology roadmap before starting to reduce beyond this period.
We also expect the average depreciation and amortization schedule of seven to 10 years for these major projects once they go live. At our investor day in June last year, we set a range of capital management settings to provide future flexibility, primarily to fund the technology modernization program. This included moving to a dividend payout ratio range of 80% to 90% of underlying profit after tax and operating a dividend reinvestment plan, which was taken up by 10% of our shareholder base when activated for the first half 2024 dividend. We intend to maintain the dividend range for the medium term and continue to operate the DRP in order to give us financial flexibility. In February this year, we launched a corporate bond raising AUD 275 million. This is another source of liquidity, which we expect to primarily support expenditure related to our technology modernization program.
This was the first corporate bond issued by ASX and was well supported by the market. ASX has a strong credit rating of AA-, with a stable outlook from S&P, and we remain focused on maintaining this rating. We also introduced underlying ROE as a key performance metric for the organization last year, with a medium-term target range of between 13% and 14.5%. This metric provides shareholders with a way to assess the performance of ASX over our five-year strategy, as well as balance the investment requirements of near-term focus areas Horizon One, with growth in Horizon Two of our strategy. While the first half 2024 figure was beneath this target range, we expect that the future revenue growth and the focus on expense control should drive a return to that range over time.
So, to summarize, we expect the total expense growth rate to moderate to 6% to 9% in FY25, with an increasing contribution from depreciation and amortization. We expect capital expenditure to remain elevated in the medium term in order to support our technology modernization program, and we are maintaining our current capital management settings to allow flexibility in the way that we fund this program. And finally, we are focused on sustainable shareholder returns, as illustrated by our medium-term ROE target of 13% to 14.5%. So, we're now scheduled to take a 10-minute break, which will be followed by the first business line presentation where Blair Beeton will talk to us about the listings business. Thanks very much, and we'll take that break for the next 10 minutes.
Good morning, everyone. My name is Blair Beeton, and I'm the Group Executive of Listings here at ASX.
Today, I'll be discussing why ASX is an attractive market to list and raise capital, and how we perform well compared to global peers. I'll begin by outlining the key benefits that ASX offers as a listings venue, touch on private capital, the cyclicality of IPOs, the growth in investable capital on ASX, and some recent ASX listings. I'll finish with a brief outline of our growth strategy. We offer a compelling listings value proposition for both Australian and foreign businesses seeking to raise capital and source liquidity. A major tailwind for our business is Australia's superannuation or pension system. It's the fifth largest globally, with assets of approximately AUD 4 trillion, and is forecast to grow to more than AUD 11 trillion over the next 20 years. ASX can offer earlier access to key benchmark indices, which enhances visibility and liquidity by driving both institutional and retail investment.
You can gain entry to the S&P/ASX 200 with a market cap of approximately AUD 1 billion, whereas entry to the US S&P 500 is materially higher. ASX offers listed companies outsized access to capital to growth, and I'll go into that in more detail a bit later on. Apologies for that. In the US, multiples generally drop materially for companies outside of the S&P 500. For example, US small and mid-cap tech multiples can fall from around 8x price over sales to less than 1.5x, whereas the multiple in the ASX All Tech Index is around 5.5. Companies in the US small and mid-cap indices are closer in size to those in our index, demonstrating that some companies may achieve better valuation outcomes by listing on ASX.
Third-party analysis shows that the initial and ongoing costs of listing on ASX are generally one half of that of listing in the US. Our listing rules and regulatory settings are robust but are more streamlined than some other markets. For example, ASX's if not, why not regime provides a non-prescriptive approach on corporate governance, and reporting semi-annually is less onerous than reporting on a quarterly basis. Finally, an ASX listings offers companies crucial elements of price discovery and price transparency that aren't available in the private market. Now, we have a great offering here at ASX. However, we continually engage with the market to understand what changes we might make to help maintain ASX's globally competitive position. There's been some discussion about the growth in private capital and the potential impact it might have on listed markets.
While it has grown here in Australia, it's important to put that growth and the absolute dollar amount into context. Private equity and VC capital represent a very small amount of the capital relative to the AUD 2.5 trillion listed market here. Public markets are the primary source, contributing over 97% of capital to fund and grow businesses that contribute to our economy. Public markets provide capital at scale and are crucial to Australia's future. Now, private capital is clearly part of the financial ecosystem, and there's a mutually beneficial relationship between private capital and listed markets. Most VC and PE funds have finite lives and will seek ways to exit their investments. ASX is an attractive liquidity option for both. Now, for the rest of this presentation, I'm going to refer to calendar years to make it easier to compare ASX with peer exchanges.
In 2021, there were 241 new listings on ASX. Now, new listings have been slower since then, and this chart shows the cyclical nature of IPOs, not just for ASX, but for peer exchanges over the past 25 years. Over that period of time, the median number of IPOs per year on ASX was around 94. It's important context for what's happening right now. This is a global cycle, not just an Australian one, and it will turn. While we're still at the bottom of the cycle, there's an increasing confidence around the macroeconomic environment, which means that we expect the outlook to improve going forward. You're starting to see some of that activity beginning now. The key takeaway here is that there's been net new capital coming onto ASX in each of the past seven years.
This is shown in the green boxes at the top of the chart. The blue circles represent total capital raised on ASX, be it via initial listings or secondary capital raisings. Now, a significant portion of an important component of capital raised by ASX-listed companies comes via secondary offerings. And I'll touch on that a little bit later on. The gray circle inside represents the capital that's come off exchange due to entities delisting. As I mentioned, the net capital listed for the year on ASX is the green box at the top. Let's dive into 2023 numbers just a bit deeper. There was an elevated amount of takeover activity that year, so it's a higher percentage in the gray circle. Delisted entities totaled AUD 56 billion. However, AUD 39 billion of that was recycled back onto ASX. And there were three deals that explained most of this.
There was Newmont's AUD 21 billion takeover of Newcrest and subsequent dual listing here, Livent's AUD 6 billion merger with Allkem, which dual listed as Arcadium, and BHP's AUD 9 billion cash takeover of OZ Minerals. So, in the seven years ended December 2023, there's been AUD 441 billion of net new capital added to ASX. And that trend has continued in calendar year 2024. For the first five months ended May, there's been a net new capital of AUD 7 billion added. Now, you all know this, but the two of those months are generally a bit slower, and the second half of the calendar year is usually busier than the first half. You will have seen commentary about the size of the ASX market. However, this reporting is too simplistic, as it's been focused on the number of companies.
While the number of listed entities on ASX has decreased, it's only down 2.5% over the past 7.5 years. That's a decrease in listings of 56. Now, some markets, such as the UK, have some structural issues at play, where you've seen the UK pension funds holding now only about 6% in domestic listed equities. In the Australian pension system, Australian equities represent around 25% of total investments. My first slide outlined why ASX will continue to be an attractive listing venue. We have a strong and growing pension system, which has the highest allocation to listed equities globally. ASX's rules and frameworks are conducive to new listings, and we are a global leader in secondary capital raisings. Finally, listed markets provide liquidity for investors, founders, and staff, in addition to price transparency and efficient access to capital.
ASX generally performs extremely well in follow-on offerings and is admired globally for its efficient regime. Now, let me walk you through this slide. On the left-hand side, we show the dollar amount of follow-on capital raisings relative to the size of that listed market, expressed in basis points. On the right-hand side, we show the absolute dollars raised on those exchanges. Now, sticking with the right-hand side, in 2023, ASX-listed companies raised AUD 26 billion, more than Hong Kong and Toronto, both of which are larger markets, and close to London, again, a larger market. On the left-hand side, you can see that based on that AUD 26 billion and relative to our Australian market cap of AUD 2.6 trillion, we rank materially higher above other exchanges.
At a rate of 101 basis points, follow-on offerings on ASX are about four times the rate of NASDAQ and three times the rate of TSX. Three factors explain this. Firstly, ASX's efficient rule frameworks that enable a streamlined secondary capital raising process. Secondly, continuing investor demand driven by the growing pool of capital here in Australia. And finally, the attractive investment opportunities offered on ASX.
So, if you're a growing company that wants access to capital to continue that growth, you should consider listing on ASX. Data center NEXTDC is a clear example of this, having raised close to AUD 2 billion in the past 12 months. NEXTDC listed on ASX in December 2010 with an AUD 80 million market cap, and today it's worth almost AUD 11 billion. It's a great ASX-listed tech success story. This table shows some of the material ASX listings for 2023 and thus far in 2024.
The number of dual listings demonstrates the attractiveness of our market to companies listed overseas. They come seeking access to our large pools of capital, investor expertise, and sector specialization. There's benefits for Australian investors as well, who get additional, generally larger, companies that they can trade, clear, and settle in Australian dollars in this time zone. I'd like to draw your attention to two successful dual listings: NASDAQ-listed Light & Wonder, the gaming software business, and TSX-listed Capstone Copper, a Canadian miner. Both have joined a strong reception on ASX, and both have materially re-rated from a valuation point of view. Yet neither raised capital at the time of dual listing. Once dual listed, we have seen significant liquidity move on to ASX due to investor demand. Because of this, Light & Wonder was able to gain entry to the S&P/ASX 200 Index in about 6 months.
Both dual listed to access the expertise of Australian investors and good ASX-listed sector comparables. For Light & Wonder, this was ASX-listed Aristocrat Leisure. For Capstone, ASX is the global leader in metals and mining listings and offers deep sector specialization and investor sophistication. Now, both of these companies are large in their home markets, and their home markets also offer investor expertise in their respective industries: NASDAQ for gaming, TSX for mining. The positive reception here demonstrates the true attractiveness, strength, expertise, and depth of our market. Guzman y Gomez is expected to list on the 20th of June with a market cap of AUD 2.2 billion. It's a significant IPO for the market, the largest since 2021, and demonstrates a return to conditions where investors are willing and confident to value and support new listings in our market.
Our number one focus remains the Australia and New Zealand markets. We want ASX to continue to be the listings venue of choice for ANZ issuers. Given investor demand, this includes a focus on the technology, resources, and renewable sectors. For offshore, we continue to execute a targeted strategy where ASX has a compelling value proposition and a right to win. We've continued to engage throughout the cycle to ensure that prospective issuers and those that influence where a company lists, directors, VCs, private equity, bankers, and other advisors all understand the benefits of listing on ASX. Those engagements are helping to build a pipeline of prospective listings that we expect to begin coming to market. There's an enduring need for capital, liquidity, and price discovery. ASX offers growing companies access to capital in a dynamic and growing market at volumes above the relative size of our market.
Thank you for listening. I hope this has provided some useful insights and context on our listings business. I'll now hand over to my colleague, Darren, who will discuss our markets business.
Thank you, Blair, and good morning, everyone. My name is Darren Yip, and I'm the Group Executive of Markets. Today, I'd like to discuss the two lines of business that are the main revenue contributors for our division: the cash markets trading and the interest rate futures businesses. This is particularly relevant given the recent trends we have witnessed in the years following the COVID-19 pandemic. Then, I will outline how we're thinking about growth as part of our five-year strategy and conclude by discussing an example that will illustrate our role in the ASX value chain. Let's start by delving into one of the key revenue contributors for our business, starting with cash markets trading.
To provide some context on our current position, let's take a look at the recent equity index performance. Looking at the light blue line on the chart, you can see that there was a strong rally in the S&P/ASX 200 index, surging 7.7% during the December quarter last year. This momentum continued into the March quarter 2024, with a further 4% return reaching an all-time index peak of just under 7,900 points. This upward trend was similar in other regions, with records set in the MSCI All-World Index. A common theme behind these equity market rallies has been the influence of central bank monetary policy actions in the current inflationary environment and the market's expectations and perspective on this theme. While near-record equity index levels are encouraging, elevated market valuations have not directly translated into trading volumes.
The current higher interest rate environment allows investors to earn competitive, risk-free returns through cash deposits. This contrasts sharply with the recent COVID-19 years, when near-zero interest rates and government fiscal stimulus drove higher equity market volumes and valuations. The dark blue line on the chart shows the 20-day moving average daily value trades in the cash equities market since July 2017. The gray shaded area of the chart highlights the pandemic lockdown years, where there was heightened trading activity. The table to the right shows the average traded value of cash equities for each quarter of this financial year compared to FY19 before the COVID pandemic. This clearly shows an improvement in volume, which is encouraging to see. Now, moving on to some observations in terms of how our customers are executing their flow into the different venues on our exchange platform.
Around 10% of trades are now executed via our Centre Point dark pool venue as clients seek to achieve price improvement on their order flow. Additionally, nearly 25% of trading now takes place in our closing auction process, where clients seek to benchmark to the close price. The team continues to look at ways in which we can enhance our market microstructure to seek to improve the execution efficiency for our participants. As Tim mentioned earlier, this includes the proposed upgrade of our ASX Trade platform to remove the opening auction stagger process and the proposed introduction of a new end-of-day post-close trading session to allow an additional liquidity window for investors. These changes will seek to align our platform with international best practice and will also seek to increase the attractiveness of our trading platform for our participants. Looking ahead, several factors could potentially influence cash market trading activity.
This includes central bank interest rate decisions, which impact market sentiment and cash market activity. An increase in IPO activity, which Blair noted is currently at a cyclical low, often leads to higher interest and volume in cash equity markets. M&A activity also tends to boost cash market activity, and historically, we've seen secondary capital raisings directly translating into improved trading volume. Lastly, investors' reactions and adjustments in risk appetite based on changes in the volatile geopolitical landscape may impact activity, including events such as the upcoming US election. Moving now to the other main contributor to our revenue, which is our interest rate futures business. We operate the fourth largest interest rate futures market in the world and the largest in Asia-Pacific. So, volumes in our Australian and New Zealand interest rate futures ecosystem are a significant revenue driver for our business.
Financial year 2024 has seen a continued increase in Australian interest rate futures volumes, which is a trend that started in financial year 2022 following the removal of the RBA yield target control measures in November 2021. However, volumes still remain slightly below pre-COVID-19 levels. Globally, we've seen restrictive monetary policy throughout this financial year, with the predominant theme of higher-for-longer interest rates. The major central banks have all raised interest rates to a range between 4.25% to 5.5%. Locally, the RBA increased the cash target rate to 4.35% in November 2023, adopting a more conservative approach compared to the major global central banks. Post the RBA's decision to raise rates in November, they have continued to place interest rates on hold, while keeping a close watch on inflation and other key economic data. This has resulted in moderate price volatility across the Australian interest rate curve.
The market continues to focus on whether Australia has reached a peak in interest rates and potentially if and when the RBA may cut rates as inflationary pressures ease. The chart highlights how macroeconomic factors throughout the financial year provided market participants with spread trading opportunities. We observed moderate levels of price volatility, particularly between the three- and 10-year tenor points domestically and between the Australian and the US 10-year points, which has bolstered trading volumes. The current band of market volatility supported renewed trading activity in our interest rate ecosystem. This is in stark contrast to the excessive levels of volatility we saw in financial year 2022, which adversely impacted market activity and liquidity during that period. Particularly noteworthy in our interest rates complex has been the activity in our 90-day Bank Bill Futures.
Volume in this contract was a historic peak in calendar year 2023 and more recently recorded their highest volume month ever in April 2024. Overall, the current high-for-longer interest rate environment has been positive for our Australian interest rate futures volumes. This is illustrated by the fact that our total futures volume across all asset classes is up 16% on PCP for the year to date, as reported in our May monthly activity report. Note this growth is predominantly driven by Australian interest rate futures activity. Looking ahead, Australian interest rate futures volume has not fully recovered to pre-COVID peak levels, and there is potential for further growth. This is depicted in the chart when you compare our year-to-date FY24 volumes to the same period in FY19. As mentioned earlier, there are several factors that may influence volume. One key factor is government debt issuance.
The 2024 budget forecasts anticipate continued growth in federal government debt issuance until 2028. Increased primary issuance directly benefits our interest rate futures volumes in two ways. Firstly, when the new debt is issued, market participants use our bond futures contracts to price the issuance. In addition, participants will also execute Exchange for Physical transactions against bond futures, which drives interest rate futures trading activity. Secondly, market participants will actively trade our interest rate futures contracts across the curve to risk manage their physical positions acquired in the secondary government bond market. Generally, increased government debt issuance supports increased activity in our interest rate futures complex. I'll now move on to outline how we can support further growth in our business. I'll spend some time discussing our value proposition that we aim to deliver to our customers and the market and how this can help to drive growth.
We're committed to continue providing resilient, modern, and sustainable trading and clearing platforms. These platforms aim to seamlessly support and deliver value to our customers and the market. We always want to be the market's choice, and this means offering high-quality markets, deep liquidity, diverse participation, and modern microstructure. We'll continue to evolve our comprehensive product suite that allows our customers to manage their risk and provide investment opportunities. To get there, we're focused on building upon our strong foundations. As Tim mentioned earlier, our technology modernization plan is underway and will continue to be a focus for FY25. I want to provide a quick overview of how we'll support our business. Firstly, on the cash trading platform, the next ASX Trade release will introduce new features and microstructure enhancements for our trading participants. We will also strive for a continuous release cadence to maintain a contemporary cash trading platform.
For the derivative clearing platforms, the proposed upgrade of our OTC clearing platform will simplify and modernize the technology stack to improve the customer experience and enable expanded product capability. Secondly, the planned replacement of our futures clearing platform will align the service with international best practice and improve our ability to service our stakeholders. For the derivative trading platform, the next service release will provide some functional features and bolster technical resilience for our customers. In addition, we have started work on a replacement solution for this platform. We continue to remain focused on our stakeholder engagement efforts to ensure that we are listening and engaging our stakeholders and accounting for their feedback in the evolution of our products and the quality of our markets.
We are also sensitive to the amount of change we are striving for during this multi-year technology modernization roadmap, so careful planning and engagement with our participants is integral to our strategy. We have a wealth of ideas in terms of new products, services, and growth initiatives, but it is important to strike a balance. We will stay focused on our foundational work while still delivering value to our customers throughout this multi-year modernization journey. I wanted to conclude by outlining one of the growth opportunities that presents itself as a structural tailwind, which is the transition to net zero emissions. The global energy landscape is undergoing a historic transformation, and governments around the world, including Australia and New Zealand, have set ambitious emissions reduction targets. As Helen mentioned earlier, exchanges have a crucial role to play in our journey towards net zero emissions.
We are uniquely positioned to offer the products, connectivity, and price transparency to support our customers by providing liquid and transparent derivative markets to hedge transitional price risk. This will support market participants in meeting their emission reduction targets and compliance obligations, but also aligns with government policy. To that end, we are developing an integrated ecosystem of products to support the transition to Net Zero, which builds upon our core electricity derivatives business. This ecosystem is intended to encompass electricity, gas, and environmental products. Australia is one of the world's largest LNG exporters, and the Australian Energy Market Operator implemented a gas supply hub at Wallumbilla to enable improved wholesale trading of natural gas for the East Coast gas market. The Wallumbilla Gas Supply Hub spot volume has, on average, grown over 20% per annum in the past five years, indicating strong demand for the physical commodity.
We intend to list Wallumbilla gas physically deliverable futures shortly, and we've been developing this product with over 25 organizations as part of our ASX working group. This highlights strong customer demand for the futures product. Gas is an important fuel in facilitating a smooth and cost-effective energy transition, and we may add additional regional gas contracts to our product complex to seek to further support this transition. We are developing three physically deliverable environmental futures contracts over Australian Carbon Credit Units , Large Generation Certificates , and New Zealand Units . These contracts will provide a transparent forward curve for the market to hedge and risk-manage transitional risk. A liquid environmental futures market at scale can help capital flow to projects that support the energy transition and result in carbon abatement.
The physically deliverable nature of these products also allows for the surrender to the relevant registries and enabling our customers to meet their compliance obligations. The listing of gas environmental derivative products for Australia and New Zealand seeks to address a key challenge, which is the lack of affordable price transparency and risk management tools to support the investment in clean energy projects and enabling capital to flow towards projects with significant carbon abatement potential. We are also in preliminary discussions with the Clean Energy Regulator to explore how we can develop a robust and effective model for a spot carbon exchange. It would initially be focusing on Australian Carbon Credit Units . This exchange would offer a centralized, standardized, and regulated marketplace, leveraging our existing cash market trading platform for execution and clearing and settling via ASX Clear and ASX Settlement.
Lastly, this would potentially support the creation of new data products Technology and Data business to offer the market further value-added insights. Thank you, and I'll now hand over to Clive to talk to you about Securities and Payments.
Thanks, Dan. Good morning, everyone. I'm Clive Triance, Group Securities and Payments at the ASX. Thank you for your time today. I had not yet joined ASX when we hosted our first investor forum last year, so I'm pleased to have the opportunity to provide you with deeper insights into the infrastructures we operate and how they deliver value to the market. Today, I'm going to provide an Securities and Payments and talk you through each of the three areas of operations we have, being cash market clearing and settlement, issuer services, and fixed income.
I'm going to outline also two key focus areas for us: CHESS replacement and the potential move to T plus one settlement in the Australian market. Finally, I will speak to some of our growth Securities and Payments business offers a comprehensive suite of integrated capabilities using scalable, resilient platforms. Our value proposition spans a wide range of critical services, including clearing, settlement, payments, safekeeping, asset servicing, and sub-registry services across multiple asset classes. We are the life cycle of a transaction after it has been executed on an exchange or over the counter. This diverse portfolio allows us to effectively support our clients across various Securities and Payments business manages and runs platforms and facilities that help to form the backbone of our financial markets.
Demonstrating resilience and efficiency, this infrastructure reduces risk for the market through our central counterparty for equities and through our matching and settlement process for bonds. These are essential components in the transaction life cycle, promoting integrity by mitigating risk, providing liquidity, and offering surety over transactions. Our robust design and skill of our operations functions enable us to deal with operations pressures and market volatility, demonstrating our importance to the smooth running of Australia's financial market ecosystem. We cater to a diverse range of clients across the trade life cycle, from brokers to banks, from bond issuers to share registries, and our ability to adapt to evolving market demands ensures that we meet the diverse needs of our customers. As a collective of critical market infrastructures, we support the market in our role as operator for cash market clearing and settlement, which we facilitate via the CHESS system.
We also operate settlement and registry services for debt securities, which we facilitate through Austraclear. Turning now to cash market clearing and settlement. CHESS is Australia's clearinghouse electronic sub-register system for cash market equities. This platform is integral to ASX, providing an electronic record of shareholding and streamlining the settlement process. CHESS reduces risk by novating and netting transactions, and it also provides a sub-register for each ASX-listed company, allowing for the electronic transfer of legal ownership of shares. The system ensures accurate, timely, and transparent recording of transactions, which is crucial for our market participants. By automating and centralizing these processes, CHESS significantly reduces administrative burdens and risk, thereby bolstering the overall integrity and resilience of Australia's financial markets, promoting financial system stability. As you will be aware, ASX is in the midst of a project to replace CHESS.
I'll give you an update on the status of CHESS replacement projects a little later in this presentation. But it's also worth mentioning that there's an ongoing investment to ensure the continued performance, resilience, and supportability of the current CHESS system. As you can see on the right side of this slide, there are several revenue drivers. This includes trading volumes, the number of settlement messages, and the type of trading activity, whether retail or wholesale. Trading volume is key to this business. Any increased level of activity or trading volume is naturally revenue accretive, which means conditions such as volatility Securities and Payments revenue. a key feature for CHESS is the holder identification number, or HIN. When a share trading account is created by a broker, a HIN is allocated in CHESS for the shareholder.
The number of HINs and the amount of activity on the HIN can affect revenue. We also charge on the value of equities cleared. As I've said, trading volume is key for this business, and during the COVID pandemic, we saw a volume spike. However, it should come as no surprise that in any given period, revenue and volumes in equities operate in a cyclical manner. More recently, we've witnessed lower overall trading volumes being driven by reduced investor confidence during this rising interest rate cycle. We've seen a normalization of the holdings on HIN post the global pandemic. As confidence returns to the market, we expect to see a higher return of volumes. We're beginning to see some green shoots there. Recently, we've observed some volume growth in the use of the ASX primary market facility.
Given this is used by companies raising capital, we see this as a positive sign for the market. Moving on to Issuer Services, using the CHESS system, ASX Issuer Services tracks legal title and entitlements and maintains over 3 million active account holders with more than 20 million unique security holdings. In addition, ASX Issuer Services processes and manages around 5,000 corporate action events each year. The items on the right of this slide are chargeable events within Issuer Services. Revenue in Issuer Services is derived from charges in holding balances, charges for each HIN, and for market activity around corporate actions. ASX Issuer Services tracks and links dividends and rights issues entitlements and other corporate action entitlements to the legal holders of securities registered in CHESS. A key area of focus in Issuer Services is the uptake of electronic statements by investors.
E-statements offer greater convenience, security, and environmental sustainability compared to traditional paper statements. The size of this opportunity is notable, given we distribute more than 20 million statements per year. By Securities and Payments will offer enhanced convenience for investors, but also address environmental concerns by saving paper and reducing postage. To provide further incentive for participants to shift to digital, ASX is introducing a new fee option incentive to participants in Q1 of full year 2025. Now moving on to fixed income and payments. We provide several services in this business, but today I will focus on Austraclear, which is the main revenue driver. Austraclear offers essential settlement, depository, and Securities and Payments for cash transactions. debt securities are settled on a trade-by-trade basis.
Once a transaction is matched and securities are positioned, it provides irrevocable settlement through real-time gross settlement on settlement date. Austraclear has multiple services which each drive revenue in different ways. Firstly, registry, enabling issuers to issue fixed income securities in a secure register, providing access for a wide range of potential investors, as well as processing corporate actions such as coupon payments on those securities. Additionally, transactions, including secure delivery versus payment settlement of securities and high-value, real-time, traceable cash payments. Finally, holdings. Investors and custodians have accounts in Austraclear, which provide a secure, real-time record of their holdings. Austraclear services a wide range of fixed income securities, including government bonds, corporate bonds, and bank bills. The revenue drivers for Austraclear are both the value of the registry and holdings, which, as you can see on the graph here, have been growing, as have the number of transactions processed.
We also offer a collateral service, and this allows customers to use collateral held in Austraclear to meet a variety of obligations efficiently. In full year 2023 and half one 2024, Austraclear has enjoyed solid revenue growth from all of the key debt security types it provides, those being government, semi-government, and non-government securities. This solid performance has come from initiatives requested by customers that have led to new and enhanced settlement messages to improve settlement efficiency.
There's also been organic growth as the rising interest rate environment has supported sustained issuance and depository holdings and increased transactional activity. Looking ahead, Austraclear has several innovative products in the pipeline to address future demand and maintain its trajectory of robust growth and enhanced service delivery. Now I'll provide some additional details on the upcoming milestones to CHESS replacement and on the work regarding a potential move to T plus one settlement in Australia.
Having announced that the CHESS replacement project would proceed with a product-based solution last November, we're now in the delivery phase and are currently tracking to our milestones. As Tim mentioned, ASX entered into an agreement with Tata Consultancy Services, or TCS, for delivery of its TCS BaNCS for Market Infrastructure product, which offers a modular technology platform for clearing and settlement services. ASX has proposed to implement the solution in two stages, with the clearing services provided in release one and the sub-registered settlement services in release two. Given the scale and complexity of the project, ASX has also chosen Accenture to support us during delivery in the role of solution integrator. Within the project, we're now working with TCS on progressing the next implementation milestones. Included in this work is our sprints for delivery for the enhancements needed for the platform to meet the needs of AMOs.
In addition, we now have a version of TCS solution live in a test environment at ASX, and we are testing the scalability and performance aspects of the product. This work supports the needs of the Australian market as we prepare for Release one of CHESS replacement. This calendar year is additionally focused on industry consultation, and I'll spend some time now detailing the progress we have made on the current status of the project. ASX is undertaking two formal industry consultations this calendar year to gather the required feedback for Release one and Release two of the project. The first consultation paper for Release one relates to clearing services. This was published on the 14th of March, and we expect to be providing a response to that later this month. The consultation paper benefited from industry discussions ahead of its release.
This included feedback from the CHESS Replacement Technical Committee and three industry working groups that sit under our main customer forum, the ASX Business Committee. Work has begun on preparing release two consultation paper. This will focus on the scope, approach, and timeline for release two, but we expect to publish this in Q3 of calendar 2024. As this relates to settlement services and sub-register, we expect the consultation to cover more participants in comparison to that in release one. A key consideration for release two will be how we incorporate the industry feedback on shortening the settlement cycle in Australia from T plus two to T plus one. I'll now provide a bit more color on T plus one. Globally, major markets are pursuing risk reduction and efficiency gains. One key aspect under scrutiny is the duration of settlement cycles.
In this endeavor, and as mentioned, there is an active discussion in the Australian market around the shortening of our settlement cycles. The USA, Canada, and Mexico transitioned to T plus one around two weeks ago. Like Australia, other significant markets, including the UK and Europe, are actively exploring the feasibility and implications of shorter settlement cycles as well. An industry working group was set up by the ASX Business Committee to consider all issues concerning T plus one for Australia, and this formed the basis of a white paper that outlined the options available and invited industry feedback. The white paper responses will feed into consultation paper two for CHESS replacement, which will set out considerations on how and when to deliver CHESS phase two and if and when to deliver T plus one.
To ensure ASX fully understands the potential outcomes, we continue to talk to other regional exchanges, including Hong Kong, Japan, Singapore, and our close neighbor, New Zealand. We expect to determine and communicate the timeline and estimated costs for CHESS release two in the last quarter of 2024, following industry consultation. Finally, I want to Securities and Payments. while we are laser-focused on delivering CHESS replacement, we also recognize there are specific areas of opportunity available to us, and these include improving the uptake of CHESS e-statements, exploring the development of the Australian Carbon Exchange , which would seek to introduce clearing and settlement for carbon credits for ASX, and continuing the development of e-conveyancing Sympli. Regarding Sympli, we continue to see e-conveyancing as an attractive market, and we are enthusiastic about the opportunity to bring an efficient and customer service-focused competitor to that market.
One final opportunity area relates to delivering further customer value from the unique and important data we hold in Austraclear. Shortly, Dickon will discuss this opportunity further. I hope you found this presentation Securities and Payments is today and the path we are following to deliver robust and resilient solutions that meet the needs of the Australian capital markets in the future. Thank you for your time today, and I'll hand over to Dickon Close to talk about Technology and Data.
Thank you, Clive. Good morning. My name is Dickon Close. I'm the general manager responsible for data and access products Technology and Data business. today, I will talk Technology and Data business and our role in supporting activity across the ASX value chain.
I will set out some of the drivers of the strong growth that we have Technology and Data and how we are thinking about future opportunities, particularly in data, which build upon what you have already heard today from the other Technology and Data has two business segments. Technical Services offers a range of connectivity and hosting solutions that help market participants gain access to Australia's markets and Information Services manages the distribution and commercialization of the data generated from ASX's activities. These services are the conduit through which customers can interact with ASX, as well as other local markets, and access a record of the activity which occurs there.
Stressing this a bit further, these services represent both a gateway through which to participate in the Australian financial markets, as well as providing the necessary insights required for ongoing participation and a record of how a customer's ongoing activity is Technology and Data services are a valuable offering not just for ASX customers, but for anyone with an interest in participating in Australia's Technology and Data is an important part of ASX's value chain. ASX Technical Services offers a comprehensive suite of solutions which enable our customers to access ASX trading, clearing, and settlement functions, either from within ASX's Australian Liquidity Centre or from a customer's preferred data center. In addition to enabling access to core ASX capabilities, we facilitate connectivity to a wide array of financial services providers and third-party trading venues within Australia.
As such, ASX infrastructure supports brokers, fund managers, market data software and infrastructure providers, as well as banks and other financial services organizations. We enable customers to connect to each other and have, through this, successfully built a comprehensive ecosystem of participation within Australia's financial services industry. We make it easier for the wide range of participants to interact efficiently and securely with each other, with ASX markets and with other financial services providers operating in Information Services offers data and insights to our customers, which include the core activities of ASX. ASX Market Source provides access to ASX price data from our cash market trading platform, ASX Trade, and our derivatives platform, ASX 24. Our data can be packaged for human and machine-based consumption and is either supplied directly or through third-party distribution partners such as the major market data vendors.
We cater for a broad array of end users' data requirements, including end-of-day and intraday updates, through to low-latency data from our trading engines. ASX ReferencePoint includes access to ASX reference data sourced from our trading support systems. These help customers with the task of financial data management by providing them with master lists of tradable instruments, corporate actions data, and market activity reporting. We also respond to individual customers' needs by packaging data into subsets to address specific requirements. ASX ComNews offers access to more than 150,000 ASX-listed company disclosures that we receive and redistribute each year. We cater to our customers by offering real-time browser-based solutions through to more advanced requirements such as algorithmic sentiment scoring and data analytics.
Finally, Benchmarks and Indices includes the revenues from the distribution and licensing of ASX-owned and operated benchmarks such as the Bank Bill Swap Rate, as well as our long-standing relationship with S&P Dow Jones. Technology and Data services are mostly supplied to our customers under fixed recurring revenue contracts. The structural tailwinds highlighted earlier are relevant Technology and Data business. Australia's large and growing capital base supports participation in markets. This is facilitated by access to ASX data and services. Our data supports decision-making both by humans and increasingly by machine-based applications. This trend continues to drive demand across a broad range of requirements, including leveraging our market indices and benchmarks as a proxy for investment performance or designing new algorithms for detecting opportunities or risks. We see demand for data and technology from financial market participants increasing through a number of systemic changes and initiatives.
These include projects to increase automation, demand for new data sets to support our customers in managing evolving compliance and risk management requirements, as well as the emergence of new forms of quantitative and qualitative analysis tools. Customers tackling these challenges regularly reach out to us to explore ASX data capabilities and to leverage the efficiency of our Technical Services ecosystem. This ecosystem centered on the Australian Liquidity Centre provides much of the physical and virtual plumbing for the Australian financial markets. We link together a growing range of local and global participants and service providers, all seeking to do business with each other in a streamlined and secure Technology and Data revenues are linked to the global market's desire to participate in the Australian financial markets and to the way emerging technologies drive the way data can be used to gain new insights.
ASX's success in building flexible, resilient, and high-quality data services, as well as developing the ASX Technical Services ecosystem, positions us well for future growth. I wanted to highlight some of the key growth opportunities that we are currently focused on. Listening to our customers is fundamental to developing these opportunities. Our technology modernization program not only allows us to respond to our customers' needs, but also positions us to anticipate future demand by leveraging upgraded data capabilities. Many of the opportunities we are currently working on are linked to activities in other parts of ASX, again demonstrating the importance of our value chain. Starting with fixed income market activity data, which you heard Clive mention just before, Austraclear is the registration and settlement system for the vast majority of Australian dollar-denominated fixed income instruments and, as such, is a primary source of local fixed income market data and insights.
It is uniquely placed to help debt market participants with the operational automation challenges they face. This data adds to market transparency, can assist with the appropriate asset valuation, liquidity insight, and risk management challenges. In response to customer demand, we will be launching our Australian fixed income activity services in FY25, complementing the fixed income reference data services, which we launched last year. The forthcoming trading engine upgrade initiatives that you heard about in Darren's presentation earlier, combined with investments already made in upgrading our sources of reference data, offer us the opportunity to make new forms of pricing and reference data available to help customers to further automate processes and obtain additional data insights, such as enhanced reference data for instruments listed on ASX 24.
The new environmental futures contracts that the markets team is working on will also offer us the opportunity to provide new data sets and address new areas of market demand. Another opportunity comes from listed company disclosure data. Companies are being asked to disclose more information in line with Australia's emerging climate reporting standards. Simultaneously, investors have an appetite for more detailed, accurate, and comparable disclosures. We are exploring what role ASX could play in helping with these challenges.
We are also looking more generally at how we can improve the accessibility to data and insights contained within company disclosures. We expect the ongoing evolution of technology will present us with new opportunities for growth. ASX's technology modernization projects give us focused opportunity to broaden and upgrade the data and access options we make available across ASX's activities to support our customers. Thank you, and I will now hand back to Helen.
Thank you very much, Dickon. So, to conclude, I'd like to remind you of our investment proposition and the key messages that you've heard from us today. ASX has significant strengths. We operate critical market infrastructure at the heart of Australia's financial markets. We have a portfolio of high-quality businesses with diverse revenue streams and a strong position in many of our markets. Our business model and value chain is compelling for customers and gives us the ability to play an important role throughout the market life cycle. We have significant structural tailwinds, macro factors that will drive our long-term growth. We're well positioned to benefit from the size and ongoing growth of the Australian capital base as it drives activity across our markets.
As an exchange, we're a data-rich environment, and we expect to see further demand for our unique data as the role of technology in markets continues to evolve. We also have an important role to play in supporting the transition to net zero over the coming decades. These structural tailwinds, combined with our value chain, are the key drivers of our growth. Today, we've shared some of the current growth opportunities with you. We're one year into our five-year strategy and making good progress Horizon One, which is primarily focused on Great Fundamentals, but we still have more to do. The majority of our focus and investment will remain on regulatory commitments and our technology modernization program in FY25 as we prioritize the sustainability of ASX, which drives long-term shareholder value.
We've provided FY25 financial guidance, which reflects our ongoing focus on operational efficiency and the investment required for our technology modernization program. This investment is essential for delivering sustainable growth, and you've heard some of our thinking around growth opportunities as we look towards Horizon Two of our strategy.
Thank you. This concludes the presentation part of the Investor Forum. So, we'll now switch over to the Q&A part of the day, and I invite some of my fellow presenters up to join the panel. We're going to begin with questions in the room, and then we'll take questions from the webcast.
Thank you. Great. Hi. Good morning. Kieran, do you want to go first?
Kieran Chidgey from Jarden. Maybe just starting on the cost outlook for 2025, Helen, the OpEx growth of 4% to 7%.
I think you previously flagged at your first half result about AUD 11 million staff redundancy costs, which is about a 3% tailwind. Again, today, you're flagging lower redundancy costs into next year. So, you know, adjusting for those two factors, it looks like you're still running underlying cost growth from an OpEx point of view in the high single-digit range. I know you talked about, I think on one of the slides, tech license costs and equipment costs, but just wondering if you can unpack whether or not there's any significant unusual step up in there or why we're still running very high single-digit underlying cost growth relative to a revenue base which is more growing at mid-single digits.
Sure. I might hand over to Andrew in a second to unpack that. But just to be clear, the guidance that we're giving for total expenses growth is 6% to 9%, but the underlying expense, when you take out the D&A, is the 4% to 7%. So, Andrew, do you want to?
Yes. So, Kieran, we've called out specific actions that we have taken to get into that range. Your comment around sort of the annualized savings from this targeted restructure, AUD 11 million of annualized savings, that will come into that range for next year. So, there are actions that we have taken in February this year to allow us to, I suppose, provide that range today. So, the regulatory cost comment as well, you asked about that. We've seen that step down, but we do still have some regulatory actions underway. Helen mentioned the ASIC investigation, for example.
There is an allowance that we're thinking about for next year, but it's in a broad range of what we've provided today, that underlying excluding depreciation and amortization range of 4% to 7%.
And I think, as Andrew highlighted, in terms of some of the drivers of that growth, we talked about software licenses and some of those types of expenses as being some of the key components we see there. Are they unusual sort of in terms of the level of step up coming through in 2025? I just, you know, it seems odd that license costs and equipment costs would drive that sort of high single-digit growth.
That's the specific area where we've seen the higher cost growth. Yeah. Okay.
Maybe just also following on D&A, so it looks like you're flagging a sort of 25% to 30% growth there in terms of a fairly significant step up, but we seem to be fairly early days in the journey in terms of higher CapEx coming through. You know, and I think you've flagged previously a lot of the D&A coming off those tech modernization programs only commences once those platforms go live. So, two questions around that. One, what is driving that step up into 2025? And then, as we think sort of over the medium term, what are the key go-live dates? Like, how do we think about that D&A profile over the next couple of years?
Great. Thanks, Kieran. So, just in terms of the step up in 2025, obviously, we've had various technology activities underway for some time.
And so, really, what you're seeing is certain of those technology projects going live and then switching into amortization mode. That's starting to happen. And maybe I'll hand over to you to talk a bit more about the profile and sort of how to think about the various pieces in there.
Going forward, yeah, sure. I'd expect a steady step up in the depreciation and amortization charge over the next few years. And really, I suppose the building blocks to that is the forward CapEx guidance that we've provided today, the AUD 160 million-AUD 180 million over the next three years, and then an expectation that that will sort of taper down from there. But also, hopefully, the technology roadmap is giving you some indications around the potential go-live dates of those major sort of technology projects that we're sort of putting into production.
I would also note that the amortization period of 7 to 10 years for those larger projects means that the depreciation profile will step up gradually and will be quite elongated over quite a number of years. Okay. And just last question related to that, the stage one implementation on CHESS with Tata, I think you called out AUD 105-AUD 125 initially. I just didn't see a number for that today. Can you confirm if that has changed at all? So, we haven't changed any indication on those numbers, but it is embedded in the CapEx guidance that we've given today. In terms of any further information on those numbers, so just bear in mind, they are just a component of the overall.
They don't change the overall guidance, but we will be giving. We expect in the December quarter of this year, we'll be giving an update on release two and any associated kind of estimates of the sizing of release two at that point.
Thanks. Hi there. Simon Fitzgerald here from Jefferies. Just extending from that, just a question on the design phase of the CHESS replacement program. Obviously, you've gone with TCS, so I'd say the majority of the design is actually being completed. But just in terms of what's ongoing, particularly from a consultant consultation process with participants, how are you managing scope creep in particular? Just interested to know how you're managing that. And then the second part to the CHESS replacement question is just in regards to the infrastructure. I believe it's on Java, so that would support upgrades, I would imagine.
Does that sort of lower also the chance of future obsolescence? So, a couple of things in there. Simon, thank you. Just in terms of scope, you know, that is a really important area of focus, and there's a lot of industry consultation underway. So, there's a number of scope work. There've been a number of scope items that have been requested by the industry for investigation, and there's scope working groups with industry representatives. So, we're kind of working through those things at the moment to consider, you know, is there broad support and how would those things actually work? So, there's a lot of that input then needs to go into what are we actually recommending for scope inclusions for release two.
Because you're quite right, you know, when you go live with a new project, you've got to carefully balance, you know, trying to put everything that everyone wants in there with making sure that you have a really successful delivery. So, that's certainly a focus, but the really important part is going to be a lot of industry input because, of course, one of the complexities, you know, CHESS has its unique complexities. It's got a very large and very diverse group of stakeholders. So, it's really important to also make sure if we're going to change any scope or add any scope, that there's really broad industry support for those items as well and how those things are going to work.
So, it's definitely a significant investment of time at the moment with the industry as well, getting a lot of input, and that will absolutely be taking those factors into account in terms of what we then will be taking all of that input into account as we then consult on release two. Okay. And then I think you'd asked about the architecture. So, on that question, I'm going to hand over to my esteemed colleague to touch a bit more. I think more in principle, the whole of the modernization strategy is looking to move us to a place where for each of these platforms, we move away from the big projects and the big CapEx and more to an ongoing set of releases for all of those platforms going forward and working with the different vendors and, you know, product system suppliers.
You know, that's one of the critical, you know, parts of us assessing the best options for us is so that we're getting to solutions and architectures that mean we can get out of this cycle and more onto ongoing release model. I guess that sort of also leads me then to ask, will you look at the sort of upper end of that amortization scheduling in that regard if you're continually getting upgrades on the same infrastructure as opposed to having to replace it? 10 years still looks quite conservative. You mean as in looks conservative from a too long or too short perspective? Too short. I see. There's a bit of a balance there, Simon, I suppose. You know, the cycle of technology change and also the appropriate period from an accounting perspective.
So, we think the 7-10 year guidance is appropriate, and the 10 years for the CHESS program is appropriate as well. Thank you.
Great. Pass it to Nigel. Thanks.
Hi, it's Nigel Pittaway from Citi. Question, first of all, on your ROE target, the medium term 13% to 14.5%. I think you've seemed certainly to previously indicate you're in with a good chance of achieving that in FY25, whereas now I know the sort of language has moved to sort of in time. And also, I guess with 9% cost growth at the top end of the range, that would be difficult. Can you make some comments on how you're thinking on that and maybe clarify whether or not you still think that's achievable in FY25?
So, I'll hand over to Andrew in a moment, but I guess what I would say is obviously ROE is a factor, is a, you know, a measure that enables us to really look at overall performance of the business, taking into account multiple factors. Absolutely remains important for us in terms of, you know, the medium term ambition for the organization and what we're trying to achieve and how we resolve all of those things.
But is there anything else? I would emphasize medium term, Nigel. If I think about just this FY24 period, we've seen the first half of FY24 at 12.6, lower than the bottom end of the target range. The second half of FY24, given that we've had sort of lower expenses to get to our full year expense guidance, will be about the bottom end of the range.
So, it depends on a number of different factors. The expense range that we've provided, the 6%-9%, also the revenue opportunities that fall into next year as well. So, overall, I'd say that's our medium term target. We're very sort of focused on the 13% to 14.5%, and there are different pathways to get there over time.
Sounds like your confidence of getting there next year's come back a bit from where it was at result. Is that fair to say?
I don't think we've changed our view on that. There's a number of factors as we go through our planning cycle. As you'd expect, looking into sort of expense levels and revenue opportunities really sets the focus around that.
Okay. Maybe a question on listings. I mean, can you talk about the pipeline of potential listings and how that compares to history?
You know, other than sort of obviously the general comment about confidence, what do you think will that need to actually start crystallizing? I might hand over to Blair to cover that one in a moment, but obviously, you know, we can't share details of individual companies on the pipeline, but you can maybe talk more generally about how you see that.
Thanks, Nigel. That's a good question. I think, as I mentioned before, when I was talking, I did speak in generalities, but I would say a couple of things. One is, you know, we've had 13 rate rises over a very short period of time. We're now talking about whether rates go up 25 basis points or go down 25 basis points. So, the discussions we're having with companies are more about when they're going to do something as opposed to if they're going to do something.
There's been media speculation on various companies that will come to the market at different points. Each of those companies have got their own specific issues they're looking at doing. These are some of the larger ones. But we're very engaged with companies out there that we'll be looking to list in the next six, 12, and 18 months. And so, we expect that volume to increase. And then maybe just finally, I mean, just on the futures market, I mean, I think one of the sort of drivers there was the number of participants, you know, was higher pre-COVID, and then you were waiting for some of those participants to come back. Can you make any comments about whether they're all back now, or are you still feeling that that's, you know, a further driver moving forward?
Look, I mean, I guess the thing with the futures market is the participant profile does just evolve. So, you know, it's something that doesn't stay static at all. But I think one of the things that Darren talked to was the trading opportunities we're seeing both domestically and internationally that certainly has meant that ASX has become a much more interesting market again for some of those trading participants and hedge funds to operate in. So, we've certainly seen, you know, a number of different types of those participants become much more active.
Hi, guys. Julian here from Goldman Sachs. Just a first question in terms of your medium term CapEx guidance. So, collectively spending about AUD 500 million over the next three years. Can you maybe just talk to how you're thinking about just the split across the different major projects that you've highlighted?
Across the major projects?
Yes, for CHESS, derivatives.
So, look, we typically don't disclose sort of the individual project costs. You know, for CHESS specifically, given the, you know, the high level of interest, we've obviously released some estimates for release one, and we will provide some estimates for release two as well in due course. But that's really the limit in terms of what we're expecting to provide on the splits. I guess what I would say is that CHESS itself is a unique set of challenges. You know, it's a project that impacts millions of Australians. There's a significant shift to international standards and a completely new platform. And of course, it's got a very large and diverse group of stakeholders, and it delivers multiple different services. So, you know, it's a kind of particular type of project in its own right.
Okay. And then I guess as a follow-up question from that, I guess what gives you comfort that your CapEx will drop off post FY27? I guess if we fast forward to that, what's the sort of pipeline looking like beyond that timeframe? And I mean, in particular, you've got Austraclear as well, which you've flagged as an aging system. And when does that kick in? And so, how do you think about that?
And look, you're right. We've obviously technology investment is fundamental to ASX. And, you know, just as we previously did, we'll continue to make technology investments. But I think that what we're really flagging at the moment in terms of our technology modernization is that the material thing that's changed really is, remember, we were expecting to have CHESS done by now.
So, you know, we always knew that we were going to get into the next stage of major technology work on some of these other systems. But what's different right now and in the coming years is that we've got all of that to do at the same time, which isn't what we'd normally have going on. So, that's a key reason for this period of elevated capital expenditure as we do more of these major projects in parallel than we would previously have been expecting to do. And of course, that's against the backdrop of, you know, fast changing technology environment and, you know, ever increasing demands in terms of resilience and security.
So, it's really the fact that we're shifting into a relatively unusual profile combined with the fact that the technology modernization strategy is very focused on common reusable platforms that are going to make future change more straightforward. That gives us some comfort in terms of the change in profile. And just a last question. In terms of just the ROE on settlement and clearing, just how do you think about that relative to your group targets, particularly in context of a more normalized D&A profile that will kick in? Yeah. Look, we do publish accounts, as you know, for ASX Clear and ASX Settlement every year to make sure we give transparency there. And it is a lower ROE than the overall group ROE. So, you know, that obviously any business is always made up of a mixture of different pieces that contribute in different ways.
I don't at this stage expect that to change dramatically. And, you know, I expect it to be, you know, to continue to be a sort of slightly lower overall ROE relative to group.
Sorry, just one additional question. In terms of just the timeline for the utilization of the corporate bond in terms of just the proceeds, how are you thinking about that in terms of when it'll be? Yeah. Happy to grab that one, Julian. So, as I mentioned in the presentation this morning, we issue the bond in February. Really, that will be deployed over time, you know, to support the tech program. So, it will be a combination of obviously retained earnings, proceeds from the corporate bond that sort of fund the forward sort of technology modernization program.
Do you mind passing that? Thanks, Kirsty.
Thank you. It's Scott Russell from UBS.
Thanks for the presentations this morning, everyone. I'm going to ask about the T plus one migration. So, just confirming that's also in your CapEx budget over the next few years because obviously that's still fluid, but that'll obviously cost some money.
Yeah, look, there's absolutely, you know, there's uncertainty with T plus one about whether and when that will happen, of course. So, that's really part of our planning at the moment. And really, the area that that will impact most significantly is, of course, the CHESS release two. But I'd say, you know, it's primarily a question of, you know, what does the market want to see when? How does it impact what choices you make in terms of order and timing? Okay.
So, just to clarify, maybe stating the obvious, the new medium-term CapEx guidance that you're given covers all of the CapEx spend that you can see right out for the five-year strategy. And we don't expect to have another CapEx revision, say, in December with the phase two, nor with a T plus one. Is that the way we interpret the new CapEx guidance? Yeah, Scott, we've specifically guided for the next three years to provide that clarity to support that technology roadmap. And we've called out an expectation that it will drop beyond that. Okay. So, on T plus one, maybe you can help us with a scenario. My understanding is that it will materially reduce your capital requirements. Perhaps you could help us with a scenario there around how your risk capital might fall and the ROE target might change.
Our analysis to date doesn't suggest a material drop in capital requirements either for us or for the industry. Okay. Okay. Notwithstanding the reduced risk associated with a much shorter period of holding. Well, remember that what you're looking at is a risk period where, you know, yes, there's one day settlement rather than two, but you're still looking at worst case losses. And in the case of the Australian market, some of those worst case losses have taken place over one day. So, the difference between the one day and the two day, you know, when you take into account stress scenarios and so on, is actually not as material as people tend to think it is.
Okay. Okay. That's clear. Just one other separate question. You've referred this morning to the legislative reform around competition in cash clearing and settlements.
In that context, I wonder if you could help us to understand the pricing of clearing and settlements, how you're thinking about it. If a competitor were to enter, your ability to update pricing in a fairly short period of time, whether you think it's adequate, comparisons with global peers.
Look, we obviously at the moment we're very transparent in terms of our overall ROE for those businesses. So, we've, you know, we've published those accounts for ASX Clear and ASX Settlement over a long period of time. So, I think, you know, as you can see, there's the returns there, you know, are not, you know, they're a lower overall level of return from ASX's overall business. So, you know, we're certainly actively looking at pricing policy to make sure that that's clear and transparent.
But, you know, at this stage, nothing dramatic to really comment on there.
Nothing. Thank you.
Hi, Andrew Adams, Barrenjoey. Thanks for all the guidance comments. Just in regards to OpEx, how do I think about OpEx growth over the medium term? Does that rate of growth continue to moderate current and from here, or how should I be thinking about that?
Yeah, Andrew, I'm happy to grab that question. We haven't provided guidance beyond one year in advance. So, hopefully, we've provided some building blocks though and some demonstrated points that we are very focused on expense management going forward.
I suppose, you know, looking at the targeted restructure to call that out again, the fact that we've lowered guidance into FY25 compared to FY24 and the overarching ROE target that we've set for the organization gives us the building blocks to manage both sort of the expense profile and think about revenue opportunities going forward. So, we haven't formally provided any guidance beyond FY25, but we're very focused on.
Those license and some of the costs you called out, they should be one-offish and shouldn't kind of keep stepping up from here. Some of those headwinds that you've called out for this year.
There'll be various components in the expense space going forward. You know, combination of, you know, employee costs, for example, or staff costs, equipment costs, license costs. And we're looking at all of those cost categories as part of sort of our expense management activities.
Those revenue growth opportunities that you're talking to, do they require much more incremental investment or are they kind of coming out of the current cost space? You think you can crystallize those, you know, fairly easily on what you're doing at the moment?
Yeah, there's some that are sort of quite live. You know, Darren mentioned the Wallumbilla gas opportunity, for example. That's about to go live. So, that's already built into sort of our cost structures, for example. Others are slightly different, but they're broadly in our cost plans.
Cool. Thanks.
Any other questions in the room? Great. Okay. So, I think we'll switch over to the webcast questions.
Hi. Thanks, Helen. We have two questions from the webcast. The first one is on technology modernization. Is there one particular project that you find more challenging than the others that you listed today?
Look, I think I'd probably just reiterate that obviously the CHESS project has a unique set of challenges. It's a substantial project with a very large and diverse group of stakeholders, multiple pieces of critical market infrastructure within it. And of course, it's crucial to millions of Australians as well. So, you know, it has its own sort of unique challenges.
Thank you. And the second and final question from the webcast today is regarding the strategic horizons. You've talked today a lot Horizon One of your strategy, but when do you think you'll move into Horizon Two?
Thanks, Simon. Look, it's really not a sort of one day cut over into Horizon Two. And I think what we've tried to kind of show today is that, you know, our main focus today is still on Horizon One.
But as we execute and deliver Horizon One, we start to create more capacity to gradually focus on more of the Horizon Two opportunities. And you can see that there are some of those things live, well, that we're actively working on today. And some of those will land imminently, like the gas futures and the carbon futures that Darren was talking about. So, we're starting to think about growth opportunities. At this stage, they're the opportunities that we can do and fit around the major technology modernization program that we have underway. And gradually over time, as we get more of that program and more of the Horizon Two work delivered, that'll shift more into BAU and will gradually increase the organizational capacity for growth opportunity. So, it's more of a gradual transition I'd kind of describe.
Thank you. There are no more questions from the webcast. Fantastic.
Thank you very much, Simon. I'll just check any last questions in the room. I think we're all done. Well, I think it just leaves me to say thank you so much for coming today and for spending the time with us. We really appreciate the opportunity to talk to you about our strategy and how we're seeing things going forward. We do have some refreshments at the back of the room, so I'd invite all of you here in the room to be very welcome to come and stay for a drink and a couple of sandwiches with us. Thanks again for making the time. Thank you.