Good morning, welcome to ASX's Financial Results briefing for the financial year ending 30th of June, 2023. Thank you for taking part in this virtual presentation. I hope you are safe and well wherever you're joining us. My name is Helen Lofthouse, and I'm the Managing Director and CEO of ASX. I'm delighted to be presenting these results. Joining me today is ASX's Chief Financial Officer, Andrew Tobin. 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 thank them for protecting this coastline and its ecosystems. We pay our respects to elders, past and present, and extend that respect to any First Nations people with us today.
Today's presentation will cover 4 topics, and Andrew and I will take your questions at the end. I'll begin with an overview of the FY 2023 results and our near-term focus areas. Andrew will provide a detailed view of our FY 2023 financial performance, including a view of each line of business. Following that, I'll update you on how we're tracking on our strategic pillars, and I'll provide some observations on the market outlook and its implications for ASX. We'll finish with Q&A. You'll hear about 3 key themes at the start of today's presentation. I'll provide some commentary and highlights of our FY 2023 results, and also give an update on our 2 near-term focus areas of regulatory commitments and technology modernization.
You'll recall from our Investor Day in June, that these two focus areas sit under our strategic pillar of Great Fundamentals, and we'll need to get these right to ensure that we continue to rebuild confidence with our stakeholders. Turning now to our financial highlights. ASX demonstrated a solid underlying performance in FY 2023, with operating revenue over AUD 1 billion for the second period in a row, down just 1.2% compared to last year. This was achieved against a backdrop of challenging market conditions, this result again showed the strength of our diversified business model, with revenue growth in listings and technology and data, offset by a decline in our markets and securities and payments businesses. Total expenses were up 12.3%. This was primarily driven by increased investment in risk management and technology activities, including assurance and solution design activities related to CHESS.
EBIT was down by 7.8%, but our net interest income had a significant boost from higher interest income on ASX group cash balances. Underlying net profit after tax decreased by 3.4%, while statutory NPAT had a much steeper fall of 37.6%, mostly due to the derecognition of capitalized software assets when we paused CHESS replacement last November. ASX maintained its dividend payout ratio this year of 90% of underlying NPAT, taking total dividends for the year to AUD 2.283 per share. You'll recall from our Investor Day in June, that we are increasing our focus on underlying return on equity as a key performance metric, and have medium-term guidance ranging between 13% and 14.5%. In FY 2023, underlying ROE was 13.4%.
This year marks a period of reset and change for ASX. We launched our purpose, defined a new vision, developed a five-year strategy, and refreshed our values. I'll be speaking more about these later in today's presentation. This demonstrates the considerable amounts of work and thought that has taken place to reframe ASX, and set out the right framework for delivering value to our stakeholders. Many of you have heard Andrew and I speak about the new capital management settings that will give us the flexibility to make the right investments to drive long-term sustainability and growth.
This month marks one year since I became CEO of ASX, and a focus for me has been ensuring that we continue to bring the capabilities and skills to deliver against our new strategy. There have been a number of executive team changes over the course of the year, and just a couple of weeks ago, I appointed Dionne Wray into the position of Chief Operating Officer. Our new Group Executive, Securities and Payments, Clive Triance, started his role a few days ago after relocating from London. With these, there have been eight new appointments in my executive team, reflecting a valuable balance of experience from within ASX, moving to new roles and leaders from outside the organization. Now, having the support of this thoughtful, talented, and experienced team of people is gratifying, and I know their leadership is already having a positive impact across ASX.
We continue to make progress against our sustainability goals. This year, we met our commitment to reach at least 85% reduction in Scope 1 and Scope 2 emissions. With a 99% reduction achieved, we're well progressed on our journey towards our target of net zero emissions in FY 2025. Work is underway to identify our next set of priorities for sustainability. The next series of slides will provide an update on the two near-term focus areas for ASX of regulatory commitments and technology modernization. Since taking the difficult but necessary decision to pause CHESS replacement last November, we acknowledge that confidence in ASX has been tested. It's a key priority for me and my executive team to ensure we're taking action that will restore trust amongst our stakeholders, including our regulatory agencies.
Part of this has been publishing important reports that provide additional transparency on our existing arrangements and how we're changing and improving. We've been very focused on increasing engagement with our stakeholders, particularly in relation to CHESS replacement. During the year, we put in place the CHESS Replacement Technical Committee. We also launched the CHESS Replacement Partnership Program. Both initiatives demonstrate our desire to collaborate with the industry more closely to progress the successful completion of the project. In early June, we published a special report which details our arrangements on the supportability and maintenance of CHESS. This includes a forward work plan for ongoing investment in CHESS. This comprehensive document clearly articulated a roadmap that shows how we will support and maintain this critical system for a number of years to come. Since I last spoke at our Investor Day, we've published two further reports.
The first of these was an expert report prepared by law firm Herbert Smith Freehills, or HSF, on ASX's arrangements to identify and manage conflicts between the commercial interests of ASX group and the license obligations of ASX Clear and ASX Settlement. The report, which focused on governance of current CHESS and CHESS replacement, found that the current framework for conflict identification and management within ASX group is sophisticated and consistent with what would be expected of an organization with the complexity and scope of ASX. Of course, continuous improvement area, in this area is a given, and we expect to complete the majority of the report's recommendations for further enhancements in the coming months. Our public release of this document underscores our ongoing commitment to transparency, and these important findings should provide further confidence that ASX has appropriate conflict management arrangements in place.
The other special report is in response to the external review into aspects of CHESS replacement, which was published last November. ASX confirmed at the time that it would implement all 45 recommendations from this review, and would extend many of these to apply on an enterprise-wide basis. The special report, which ASX published today, outlines our plan and progress on implementing the recommendations, and we expect to reach completion of this work by June next year. ASX had already been undertaking work to uplift delivery capability across the organization, and these actions will lead to further improvement in de-risking project delivery and enhancing arrangements for predictable change, high-quality delivery, and better alignment between ASX and its vendors. The special report was subject to an independent audit by EY, which found it had satisfied the requirements of ASX notice.
The actions to address the 45 recommendations will also be independently reviewed on completion to ensure ASX meets all the requirements. The other key milestone on engagement that we've recently announced is the development of a new Cash Equities Clearing and Settlement Advisory Group. This group will provide input to the boards of ASX Clear and ASX Settlement on strategic clearing and settlement matters. Two weeks ago, we announced the appointment of governance expert and former ASIC chair, Alan Cameron, to the role of independent chair for the advisory group. ASX will also release its CHESS Governance Statement later this year, and it's intended to help stakeholders understand the role and responsibilities of the different ASX governance forums relevant to CHESS, including the delivery of the CHESS roadmap and CHESS Replacement.
The next two slides outline the work we're doing on technology modernization, including a deeper look at engagement for CHESS replacement. Our enterprise technology roadmap operates at three concurrent levels: delivery of our major projects, investment into technology platforms, and uplifting our delivery capability. At our Investor Day, our Chief Information Officer, Tim Whiteley, spoke about our technology delivery strategy and how we're shifting our approach to ensure that we're not just concentrating capabilities within individual projects, but taking an enterprise view by investing in technology platforms. By investing in platforms such as digital, data, and cloud, we can significantly increase automation and reuse between business lines, improving the speed of implementation and ultimately managing our underlying risks more effectively. I'll take the work we're doing on cloud as an example. Our strategy here aims to harness the transformative potential of cloud technologies and modern engineering practices.
By adopting an expanded role for cloud services, ASX aims to more effectively address present and emerging challenges, such as the need to deliver scaled infrastructure and rapid software development for ongoing technology programs. The benefits from our technology platforms and improved delivery capability will accrue to many of our projects. In our derivatives clearing project, the key initial focus will be the upgrade of our OTC clearing platform and preparing for the futures clearing platform replacement. We'll also undertake a program of stakeholder engagement as we progress these milestones. As you'll be aware, we published a comprehensive special report on the maintenance and support of CHESS in May. We continue to progress well against our published roadmap. CHESS replacement is, of course, a major project within our enterprise technology roadmap. I'll speak more about that in a moment.
We've done a lot of work over the last year on improving our delivery capabilities, with uplifts such as quality engineering and testing, delivery approaches, staff training, and integrated planning. There's more work to do, and we continue to focus on these capabilities, which will help us to simplify and standardize our technology. Our technology modernization approach shows that we continue to have a strong focus on addressing risks associated with legacy technology assets. ASX conducts operational risk assessments across key systems, and we're prioritizing efforts to mitigate risk in areas such as software currency and aging hardware. We also continue to invest to support consistency, reusability, and standardization. We understand the responsibility of operating critical market infrastructure, and while we are undertaking remediation activity in some areas, we continue to perform strongly in terms of system resilience.
ASX continues to deliver an increasing number of system changes, while we've seen a pattern of decreasing material technology incidents. We remain committed to continuing to deliver resilient, secure, and operationally reliable services that can meet market and regulator expectations. Turning now to CHESS replacement. We continue to work towards announcing the solution design in the final quarter of this calendar year. This will be subject to the formation of the Industry Advisory Group, industry input, and regulator expectations. We've previously spoken about how we're assessing four solution archetypes. We're now refining those against a solution decision framework and gathering further industry input on items such as scope and implementation approaches. As you can see from the information on the left of the slide, we've lifted our engagement across this year and are committed to providing several pathways for stakeholders to provide input to the new solution design.
For example, the new Advisory Group that's being established will contemplate matters from a high-level, strategic perspective, aiming to provide a consensus view on the best interests of the market as a whole. Meanwhile, the CHESS Replacement Technical Committee is more focused on industry impacts and detailed scoping and design, and has helped with this through several scope workshops with participants and relevant CHESS users. These forums work alongside the Business Committee , which has broad industry representation on market matters. Importantly, it's worth repeating that even once the solution design is determined, there'll be a continued requirement for industry input in the next phase of the project, and that will be a key focus for 2024. This will include refining and finalizing the scope of releases, agreeing the implementation approach, and industry-wide planning. As you can see, ASX continues to take action on our strategic priorities.
We're focused on executing well and addressing risk areas, while engaging effectively with our stakeholders to restore confidence and trust. I'll now hand over to Andrew to talk through the detailed financials for our FY 2023 results.
Thanks, Helen, good morning, everyone. As Helen has already mentioned, our 2023 operating result demonstrates the resilience of ASX's diversified business model in what has been a volatile and uncertain macro environment over the past year. Underlying profit for 2023 was AUD 491.1 million, and is 3.4% lower than the last year's result. ASX's statutory profit was AUD 317.3 million, down 37.6% compared to the prior year, after recognizing the significant item loss of AUD 173.8 million. The significant item loss included the CHESS replacement project, derecognition charge of AUD 176.3 million after tax.
That was included in the first half result, as well as second half costs incurred for the CHESS Replacement Partnership Program of AUD 23 million after tax, offset by the impairment charge reversal on the sale of our minority shareholding in Yieldbroker of AUD 25.5 million. Operating revenue for 2023 of AUD 1.01 billion was down marginally by 1.2% on last year, with increased revenue from listings and technology and data being offset by the declines in the markets and securities and payments business lines. Expenses for the year were AUD 374.6 million, up 12.3%, mainly reflecting increased staff and administration costs, as further resources were added to our technology and risk management activities.
We saw a strong rebound in net interest income in the year, up 72.4% to AUD 70.8 million, supported by RBA cash rate increases on ASX's cash balances. The increase in expenses relative to the revenue outcome resulted in our EBIT margin falling from 67.4% in 2022 to 62.9% this year, and a 3.4% decline in earnings per share to AUD 2.537 is consistent with the trend in underlying net profit after tax. Reflecting this underlying earnings result, the board has determined a dividend of AUD 2.283 per share for the full year, including a final dividend of AUD 1.121 per share, representing a payout ratio of 90% of underlying profit.
While statutory return on equity was impacted by the significant item loss, the underlying return on equity was 13.4% for the year, compared to 13.7% in 2022. Turning to the business line revenue outcomes. Total listings revenue was 2.2% higher than last year, at AUD 218.6 million. The annual listing fees, which are set based on each listed company's market capitalization, declined by 0.4% to AUD 108.3 million. This makes up nearly half of the total listings revenue. As noted earlier, the uncertain macro environment has contributed to lower initial and secondary capital raising activity.
There were 57 new listings, raising AUD 2.5 billion in 2023, compared to 217 new listings, raising AUD 58.9 billion in 2022. Secondary market capital fell by 75%, with AUD 49.2 billion raised this year, compared to AUD 196.5 billion last year, which included AUD 95.9 billion in relation to the BHP unification event. As you may be aware, we recognize the revenue derived from initial and secondary listings over five years and three years, respectively. Despite the lower capital raised in the current period, the revenue outcomes reported mainly reflect prior period activity. This is shown in the bar charts on the slide.
Overall, then, initial listing revenue recognized in 2023 was AUD 23 million, up 0.8%, and secondary revenue was AUD 78.3 million, up 7%. Moving now to the markets business. The markets business generated revenue of AUD 292.4 million, down 2.1% compared to last year. Futures and OTC revenue of AUD 211.8 million was flat compared to last year. However, we saw a 4.2% increase in total futures volumes, driven by interest rate volatility in the year. Shorter-dated contract volumes increased significantly, particularly the 30-day and 90-day bank bills, in response to a number of macroeconomic events during the year, such as the US regional banking collapses in March, and this was partially offset by declines in the 5- and 10-year contracts.
The decline in longer duration volumes was linked to reduced issues in the physical bond market. Elevated electricity prices over the year also saw a drop in the electricity contract volumes, as higher margin requirements saw a number of traders reduce their exposures. Cash market trading revenue was AUD 63.3 million, down 11.3% on last year, impacted by overall ASX traded on market value of AUD 1.42 trillion in the year, compared to AUD 1.68 trillion in the prior year. As outlined in the chart on the lower right-hand side, we did see falls in both the open trading and options volumes, offset by a small increase in Centre Point volumes traded in the year.
With increased equity market volatility, we also saw higher index option volumes, leading to an 11.9% increase in equity options revenue to AUD 17.3 million. Now, looking at the technology and data business. This business had another strong year, with total revenue of AUD 240.8 million, increasing by 8.5%. Information services generated revenue of AUD 144.8 million, up 10.9%, supported by strong growth in demand for equities and futures data, as well as benchmark and index volumes. Technical services was also up, with revenue coming in at AUD 96 million, 5.1% more than last year.
Growth in customer infrastructure and connections at ASX's data center, known as the Australian Liquidity Centre, drove this revenue increase, with the number of customer cabinets increasing from 386 in 2022 to 390 at the end of 2023. The number of service connections between ALC customers also increased, up 4.6% to 1,346 connections by the end of the year. Finally, moving on to our fourth business segment, Securities and Payments. The Securities and Payments business generated revenue of AUD 258.4 million, down 10.4% compared to last year. Issuer services revenue was AUD 61.1 million, down 22.2%, impacted by a significant decline in CHESS statements issued and lower primary market facilitation activities in the year.
The new subscription-based pricing model introduced this year also had a modest impact on revenue, is designed to remove pricing complexity for our customers and also encourage the take-up of electronic statements. The average number of issuer Holder Identification Numbers increased by 3.6%, but the decline in revenue reflected lower overall listing and market activity. Equity post-trade services includes cash market clearing and settlement activities. Revenue from these services declined by 11.9% to AUD 134.8 million compared to 2022. The total on-market value cleared for the half was just under AUD 1.5 trillion, compared to nearly AUD 1.8 trillion last year, and total settlement messages, driven by the movement and settlement of securities, fell by 11.2% in the period.
Austraclear generated revenue of AUD 62.5 million, up 10.2% compared to the prior year. Austraclear saw a 5.2% growth in holding balances to just over AUD 3 billion at 30 June, and a 15.6% increase in transaction volume, reflecting the elevated interest rate environment in the year. The Austraclear revenue outcome also includes the net operating contribution from Sympli, ASX's property settlement joint venture. Sympli continued to meet significant development and operational milestones in the year, and ASX's share of Sympli's operating loss was AUD 14.8 million, compared to a loss of AUD 12.4 million in 2022. Now, turning to expenses. Total expenses for the year were AUD 374.6 million, representing growth of AUD 41.1 million or 12.3% compared to 2022.
The FY 2023 expenses included AUD 13.3 million, representing 4% of the expense growth in relation to CHESS. These costs were incurred in the second half of the year and included the costs of the special report on CHESS and associated assurance and legal fees, as well as solution design costs for the next phase of the CHESS replacement project. The largest growth in expenses was in relation to staff, which was up by AUD 26.9 million or 15.7%, with permanent and contractor headcount increasing from 925 last year to 1,050 in 2023. Resources were added to key areas of the business, including technology and risk management, with the cost growth also reflecting salary increases in the year.
Other key areas of expense growth included equipment and administration activities, reflecting annual license fee increases, project-related consulting and assurance activities, higher insurance premiums, and entertainment costs since the end of COVID restrictions. CapEx for the year was AUD 98.7 million, down from AUD 105.2 million in 2022. I will make further comments on the operating and CapEx guidance for FY 2024 in the upcoming slides. Net interest income consists of interest earned on ASX's cash balances, less working capital facility and lease financing costs, and net interest earned from the collateral balances lodged by participants. Total net interest income for the year was AUD 70.8 million, representing an increase of AUD 29.7 million or 72.4% compared to the prior year.
The group net interest income of AUD 30 million was driven from the increase in the RBA cash rate over the year. Net interest earned on the collateral balances was AUD 40.8 million, down 8.4% on the prior year. The average collateral balances increased marginally from AUD 11.8 billion in 2022 to AUD 11.9 billion in 2023, and the investment spread on the total collateral balances remained consistent at 10 basis points, given the significant levels of excess cash in the financial system. However, the average participant balances subject to risk management or interest haircuts declined during the year from AUD 8.7 billion to AUD 8.1 billion, and this was the key driver of the overall fall in net interest earned on the collateral balances.
The excess cash in the financial system is expected to persist, leading to investment spreads on collateral balances remaining at this current level of 10 basis points over the next 12 months. ASX's balance sheet is strong and positioned conservatively, with the S&P long-term rating of AA- reconfirmed during the year, and a nominal amount of drawn debt for working capital purposes. Of note, amounts owing to participants fell by approximately AUD 1 billion over the past year, reflecting a decrease in excess cash lodged by participants. This decline also drives the level of cash and other financial assets held at balance date. Also of note, has been the reduction in the software balance, which mainly reflects the derecognition of the CHESS capitalized software, as discussed earlier.
From a shareholder return perspective, underlying return on equity in the year was 13.4%, down 0.3% compared to 2022, mainly reflecting lower reported underlying profit in the year. As I mentioned earlier, the board has determined a final fully franked dividend of AUD 1.121 per share, in line with the current year-end dividend policy of paying out 90% of underlying NPAT. As noted at our Investor Day on 6 June, the go-forward dividend policy has been modified to a range of 80%-90% of underlying NPAT. The dividend reinvestment plan will not be available for the final 2023 dividend, but may be considered for future dividends.
We also announced further changes to our capital management settings on Investor Day, aimed to balance the medium-term investment needs of ASX with the appropriate returns for our shareholders. These capital management settings include the proposed issue of a corporate bond to raise between AUD 200 million and AUD 300 million to support the medium-term CapEx program that underpins our technology modernization plans, and we plan to issue this bond in the Q1 of FY 2024, subject to market conditions. I would also like to reiterate the expense and capital expenditure guidance that we provided on Investor Day. Firstly, looking at total expense guidance, this slide outlines the recent actual expense profile over the past 2 years and the FY 2024 forecast, noting expected growth of 12%-15% for FY 2024.
This forecast reflects resource allocation to regulatory, risk, technology, and delivery activities to support the first year of our strategy reset. The growth also includes an element of costs in relation to the CHESS solution design and assurance costs. Cost control is a key focus over the medium term. We recognize that the FY 2024 growth rate is not sustainable into the future. In order to mitigate the expense growth beyond FY 2024, we are undertaking a review of our workforce mix across consultant, contractor, and permanent resources, leveraging processes, process simplification and automation, and pursuing strategic procurement opportunities. We will also review our equity investment portfolio to confirm the strategic alignment and value proposition of these investments. Tactical actions have begun in this area, with a recent decision to reduce the FY 2024 expense base of Sympli.
I expect that these initiatives will lead to a reduction in the total expense growth rate in FY 2025, compared to our FY 2024 guidance. Our CapEx for 2023 was AUD 98.7 million, compared to total CapEx of AUD 105.2 million last year. Given our strategic focus on technology modernization and the ongoing need to replace the CHESS systems, alongside other major projects, we are reiterating guidance of a step-up in expected CapEx for FY 2024 to a range of AUD 110 million-AUD 140 million. Increased project governance and delivery capability will be made available to support this heightened level of activity. The medium-term CapEx profile is also expected to be similar to the FY 2024 level. This investment is vital for the long-term sustainability of ASX and is expected to support opportunities for emerging growth.
In summary, the 2023 result reflects the strength of ASX's diversified business. ASX has delivered a resilient financial performance against a backdrop of an uncertain and volatile macro environment. With that, I'll hand back to Helen. Thank you.
Thanks, Andrew. We announced our new five-year strategy at our Investor Day in June. This strategy is key in guiding our path forward and ensuring that we reach our full potential. We're focused on the first horizon of our strategy, which is delivering on our regulatory commitments and technology modernization under the Great Fundamentals pillar. We are also making progress against our other strategic pillars, including our people-focused One ASX pillar, and I'll also provide some highlights of our customer-driven activities. It's the capable and committed people in this organization that live our purpose and deliver on our vision and strategy. One ASX is all about building a vibrant culture, where our people are empowered with clear accountability to deliver great outcomes for our markets. I'm proud of our diverse workforce, with people from 25 cultural backgrounds, including 36% from non-English speaking backgrounds.
They're being led by a refreshed and committed executive team, who are instrumental in driving cultural change. Part of this is a renewed accountability framework for our most senior leaders, which has been in place for a year and adds further clarity around ownership and responsibility in our organization. This is part of a broader capability uplift. We're investing in our people to align our key skills with our capability framework, and this will ensure that we have the right skills in place to allow our people to respond swiftly to our organization and customers' needs. Our values are a vital part of our culture, as our people live them every day. We've refreshed our values, which are closely linked to our purpose, and we're in the process of sharing and embedding them across ASX.
Our values have been developed in close consultation with our people, and you've heard me talk about these concepts before, as they reflect what we're passionate about as an organization. Putting the market first reflects our commitment to be a proactive partner, listening carefully and ensuring that we understand what matters to a broad range of market participants. Standing up for what's right is about acting decisively and having the courage to speak honestly. It's about protecting market integrity and supporting financial system stability. Achieving more together reflects our desire to harness the power of the ecosystem, to ensure robust outcomes come from a diverse range of views. It's about empowering and supporting others around our shared purpose and common goals....
Drive positive change, recognizes the changes that we, together with the industry, need to make, and our commitment to look to the future while continuously improving and achieving new standards. As part of the new era ASX, our values will shape our ways of working to create a consistent, aligned culture to deliver our strategy, achieve our vision, and fulfill our purpose. The market is our primary customer, and we want to work effectively with multiple groups of customers, solving challenges and delivering outcomes to improve market quality. Success here will be measured by consistently high levels of customer satisfaction, which should in turn drive revenue growth. We're making progress, but still have more work to do to increase and deepen our customer engagement. To that end, I personally met with many of our key customers throughout the year to discuss ways that we can further enhance our partnerships.
This type of two-way communication with our customers is vital for effective ASX operations, and their feedback was an important contribution to the development of our purpose and strategy. As part of our broader community engagement, we recently announced the results of our 2023 Australian Investor Study, which surveyed over 5,500 people regarding their investment goals. We saw an increase in the number of investors who hold on-exchange products from 6.6 to 7.7 million people, which is the highest number in over a decade, with ETFs making up a significant portion of this growth. Another key finding was an increase in the participation of young Australians starting to invest for the first time, and with 55% of them being female.
Although it was a particularly quiet period for corporate listings, ETFs had a record year in terms of assets under management. We also saw record new product launches, with 47 new ETFs admitted in the financial year. ESG-related funds continued to be a key driver, accounting for nearly a third of those with new listings, demonstrating ASX's key role in supporting sustainability efforts of our economy. In markets, we launched our options over international ETFs in April this year. This is in response to growing customer demand for trading products in international markets. We've seen activity across all contracts, with over 20,000 traded to date.
In response to the planned reduction in the frequency of RBA meetings from 11 per year to 8, the markets team is considering what new products or adjustments to existing products may be needed at the short end of the rates curve. As part of this process, the teams recently published a consultation paper to get feedback on market needs. This has been a very active part of the market in FY 2023, given the sharp rise in interest rates, and we want to ensure that we continue to provide the right products to meet customer needs. Our engagement with customers is wide-ranging. For example, we've been working with our institutional equity market participants in response to ASIC Report 708, which outlines the regulator's expectations for the industry in managing any future market outage.
For the retail market, we recently launched our ASX Options Trading Game to increase engagement and education on these products, alongside the popular ASX Sharemarket Game. ASX is a data-rich environment, and we're successfully responding to growing demand for data from our customers. In FY 2023, our technology and data business supplied data for an increasing range of financial markets use cases. Machine-based consumption of ASX data is growing rapidly as new applications emerge across financial markets workflows. For many years, we've supplied machine-readable data to support customer trading functions, and today we support a broad range of pre-trade and post-trade functions with machine-readable data as our customers increasingly seek to automate the entire trading life cycle. ASX data continues to be a fundamental input into the way our customers analyze the Australian markets to derive insights and generate better returns.
This includes the way ASX data powers the major Australian market indices, as well as an array of tailored indices and benchmarks used by our customers to support their investment strategies. We're also seeing increased use of ASX reference data and market activity data within third-party applications to help market participants carry out risk and compliance activities. Securities and payments launched a simplified issuer services pricing model at the start of FY 2023. This was developed in consultation with customers to better reflect the value that they receive and provide a more stable revenue stream for ASX. Also, in response to customer demand, we've announced that we intend to offer a subscription model for holder identification numbers, or HINs. This new structure will provide increased incentive to encourage broad use of these statements.
This also will provide cost efficiency and environmental benefits for our customers and the market as a whole. We've been making changes to Austraclear to improve our customers' experience. We've made a series of enhancements to the repo service to improve efficiency and customer usability. We've supported the move towards the latest ISO 20022 standard for payments, which is important to our customers, given Austraclear's role as a key payments platform. We showed you a version of this slide at our Investor Day. As you can see, we've continued momentum in the actions that we're taking to support Great Fundamentals in our business, and we have a series of actions to complete in the remainder of the calendar year.
We talk about these near-term focus areas, as this is where we're exposed to a heightened level of risk, particularly regulatory risk, operational risk, including our focus on modernizing our technology, and reputational risk. We're taking these actions as we aim to manage and reduce these risks throughout the remainder of 2023. We're investing in our organization to build long-term, sustainable value for our shareholders. As Andrew mentioned earlier, we're looking at a series of operating expense management initiatives aimed at reducing our expense growth rate in FY 2025. Turning to outlook. Recent market conditions have impacted cash market trading activity, and this is consistent with what we're seeing across exchanges in other parts of the world.
The rapidly raising, rising interest rate environment and geopolitical uncertainty has seen investors redirect some activity away from cash equities into other asset classes, which have become more attractive on a relative basis. This effect is also impacting retail investors, who made up 13% of trading activity in FY 2023, compared to 17% in FY21 during the peak of the pandemic. Most of these elements are cyclical. Easing inflation and growing confidence around where interest rates will peak should see some growth in cash market volumes again, although this could be impacted by further geopolitical tension. It's also important to note that FY 2023 average daily volume is still broadly in line with pre-pandemic levels, despite the decline compared to recent years, which benefited from a low interest rate environment and pandemic-related stimulus.
An improvement in these market elements would be expected to drive a recovery in the IPO market as well. Despite a particularly quiet FY 2023, there remains a solid pipeline of corporates looking to list on ASX as conditions improve. Our futures business has been a beneficiary of these recent market conditions, with the sharp rise in interest rates driving a solid recovery in rate products, particularly at the short end. Pleasingly, we're continuing to see ASX products remain a key hedging tool for our customers, and we're focused on market quality to ensure that this continues to be the case. In the long term, we expect that our structural tailwinds, including the growing Australian capital base, increasing demand for technology and data, and decarbonization of the economy, will continue to provide ASX with growth opportunities. In terms of guidance, we reiterate the key metrics provided at our Investor Day.
FY 2024 total OpEx growth is expected to be between 12%-15%, with an OpEx review underway, which is expected to bring this growth figure down in FY 2025. Our CapEx for FY 2024 will be between AUD 110 million-AUD 140 million to support our regulatory commitments and technology modernization programs that I updated you on today. We have the capital management flexibility in place to support this investment, including the proposed launch of a corporate bond of between AUD 200 million-AUD 300 million in the Q1 of FY 2024. Finally, we remain focused on ROE as the performance metric driving the organization. To conclude, FY 2023 has been a year of reset for ASX.
During this, we've delivered a solid underlying performance in challenging markets. We're making good progress against our two near-term focus areas of regulatory commitments and technology modernization to continue to rebuild confidence with our stakeholders. Thank you. I will now invite questions.
Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask a question. Participants are reminded that today they are limited to two questions at a time. If you have more than two questions, please feel free to rejoin the queue. Your first question comes from Ed Henning from CLSA. Please go ahead.
Thanks for taking my questions. I just have a first one on costs and then a follow-up one. Look, while I understand you've got elevated cost growth in 2024, 2025 guidance seemed to imply costs are going to stay rather elevated. Why can't they be around inflation? Is it just the cost, the cost of the CHESS replacement there? Just to give us some confidence in the business going forward, can ASX run at around inflation in the medium term? If so, when can cost growth fall to that level?
Thanks very much for the question, Ed. I'll maybe start briefly, and then I'll pass over to Andrew. I'd say, there've been a number of areas that have driven our cost growth. Really, it comes back to the key near-term focus areas that we've talked about. It's about our regulatory commitments, and of course, in technology modernization. There's a really significant focus for us on making sure that we're investing to ensure long-term sustainable value. I'll pass over to Andrew to talk a little bit more detail about how we see the profile.
Yeah. Thanks, Helen, and thanks, Ed, for the question. I suppose, just to reiterate, the call-outs on the call earlier today, effectively, we do understand that the growth rates are elevated into next year. We've also called out some expense management, I suppose, initiatives, including sort of looking at our workforce. We spoke about the mix of our workforce around permanent contractor and consultants, for example. Looking at sort of simplification on processes and opportunities for the organization, and also looking at strategic procurement, sort of optionality and options for us going forward over the course of the next 12 months. We think all of those initiatives will lead to a lower growth rate going into FY 2025, but we need to get through FY 2024, first of all, and then reassess where we are.
To reiterate Helen's comments as well, we, we need to deal with sort of the immediate sort of priorities in front of us, including a regulatory sort of regulatory remediation issues in front of us, as well as sort of the technology uplift that's facing us as well.
Over the medium term, do you think, you know, once you get past this hump, do you think you can run it around inflation?
Yeah, we sort of don't provide guidance, as you know, you know, beyond sort of the next year or so. Today, hopefully, gives you some comfort, and again, reinforcing the messages that we put out at Investor Day, that we're taking these initiatives during the course of this year to bring the growth rate down. We'll provide further updates as we progress throughout this year.
No worries. Then just a second one, looking at your equity stakes. You know, you talk about pulling costs back for Sympli. When do you think that's going to make revenue or, or even break even? You know, have you discussed about, you know, pulling the pin on that, or are you happy to continue to invest money towards this, this endeavor? Then further on, equity stakes. You know, are you going to continue to make these kind of investments? You look back at Yieldbroker, you know, Sympli is still loss-making. Are you just going to be more cautious when you do make these investments going forward?
I think maybe I'll, I'll start sort of philosophically with how we think about those equity investments. I think when I reflect on the investments that we've made, and maybe Sympli is a slightly different type, but one of the areas where I've seen us do really successful investments is actually when we've, when we've bought stakes in things and actually been able to integrate them properly with ASX, and we've seen a number of areas where that's been really successful. I think that's definitely been a good model for us of, of how to, add scope into the organization, but actually realize the value of an investment by being able to integrate and get the benefit from being in part of the broader ASX.
We'll certainly still be interested in those types of opportunities, not necessarily a near-term focus for us, but as a model for what's been effective in terms of growth and investments, that certainly worked well. That's not to say that other models can't, and maybe I'll pass over to Andrew to talk a bit more about how we're thinking about Sympli at the moment.
Yeah. Thanks, Helen. Sympli, we're pleased. Recently, the regulator passed effectively expectations around interoperability dates, and that is December 2025. We're still waiting for the regulation to be formally passed to enforce that regulation. We expect that to happen over the course of the next couple of months. That really gave us some pause to think about sort of the expense profile of Sympli over that period of time. We took the prudent action at Sympli to effectively reduce the cost base in the short term, but noting that those interoperability dates are the really critical dates that we're thinking about, and we expect those to come into force on December 25 at the latest.
What about the You know, are you hoping to get revenue in the first half after December 25? Is break even soon thereafter, or is it years after? How should we think about the profile?
Yeah, Ed, it's a bit early to call that at this point in time. There, there are different, I suppose, opportunities within that business to generate revenue, but we haven't given guidance at this point in time around a break-even point.
Okay. Thank you.
Thanks very much, Ed.
Thank you. Your next question comes from Nigel Pittaway from Citigroup. Please go ahead.
Good morning. First question relates to the average fee for contracts on futures and options. That looks to have been pretty flat, second half versus first half, but the electricity volumes, as you pointed out, did come off a fair bit in second half, prima facie, I'd have expected that to lower the fee. I was wondering if you could just unpack some of the other moving parts in that, in terms of, you know, why, why the fee's been flat, despite obviously some of that lower margin stuff-- sorry, higher margin stuff dropping off?
Sure. Thanks very much. Good morning, Nigel. There are a few moving parts in there, as you say, 'cause there are different products that have different fee levels. You're right that Australian electricity is a higher one. It has dropped off. There would be some impact from that. There have been other things that have changed the mix a bit, would be quite a strong performance in equity futures, which are at a slightly higher price point than rates. The other thing that can move that around is the type of trading activity and the level of volume rebates. If you see more diversification of participants, then the mix will probably be slightly less, as you'd have slightly less in terms of volume rebates.
Certainly on the rates market side, we've definitely seen, you know, a broad-based participation as that product set's being used very widely with the rising interest rate environment. Yeah, I think that the Australian electricity coming off would've had some downward impact. I'd say the equity futures piece is probably pushed back the other way.
Okay, just whilst we're on electricity, I mean, the higher margin requirements there, is that just simply an outworking of the higher prices, or is the?
Yeah.
Are there other factors at, at play in respect of that?
Yeah, the, the big thing is certainly high prices. Also volatility in those prices. You've seen both, you know, margin levels reflect obviously potential losses. What you've also seen, that I know has been challenging for the market, is that as you've got prices high-- very high prices, but also prices moving around significantly, then you see significant variation margin calls as those prices move as well. You know, it's certainly been, a, a challenging year for the electricity market this year for, for the market participants.
Okay. Then maybe just on the upgrade of the OTC clearing platform, I mean, do you think that will drive greater volume? Because, you know, prima facie, it does seem as if you're spending quite a lot of money on a business that's not giving you, you know, a massive return.
Thanks, Nigel. We certainly have evaluated that carefully. I'd say the derivatives clearing platforms broadly are a set of platforms where we're certainly focusing on some significant investment, and it's across multiple platforms to really refresh the technology there. That's something that's really necessary. The OTC business, actually, we've seen growth in that business again. Obviously, it's been challenging for the last couple of years with the interest rate environment, but we're certainly seeing some activity come back in there. We think there's potential for future growth in terms of both additional users and potentially further products in the OTC space as well.
Certainly an area where at this stage, we think that that's an appropriate investment, both from the point of view of running critical market infrastructure and making sure that we're operating that at the right level, but also, the opportunities for future growth, too.
Okay, thank you.
Thanks, Nigel.
Thank you. Your next question comes from Siddharth from JP Morgan. Please go ahead.
Good morning. A couple of questions, if I can. Just carrying on, on the theme of expenses, I was hoping Andrew, you might be able to just provide us a bit of color around just the catch-up profile of the D&A to CapEx. I think there's about an AUD 60-odd million gap at the moment, and obviously a significant increase in guidance on CapEx into FY 2024. I was just wondering if you could help us understand just how that D&A profile, your latest thinking around that, when it should actually catch up to what you're guiding to as, you know, sort of medium-term levels on CapEx.
Yes, Sid, happy to take that one. Initially, sort of in, in next year's guidance, the 12%-15%, the depreciation number is probably very similar to this year's number, maybe a little elevated, but not significantly elevated from the current number that we've reported this year. Over the medium term, of course, we don't guide to that level, but I'd expect that depreciation charge to increase a little bit. You point out correctly that as we've got an increased CapEx level, that depreciation will come through eventually. It will be into the distant, sort of over the medium term is my expectation.
Because of the, the build time, for, for these particular systems, if you think about CHESS or the trading system, et cetera, there'll be a build process, and then there'll be sort of a deployment. When that system's in use, from that time onwards, that will be the point where it starts to get depreciated. So it will be over the medium term, that you'd see the see that sort of, increase come through.
Okay, great. Thank you. Just my second question is just on the revenue side. You did flag that, with the move to, fewer RBA meetings, you're looking at new contracts, that, that might, you know, meet investor demand I'm just wondering, just, you know, with your existing contracts, whether there's likely to be a reduction in volumes just with the, with the fewer RBA meetings, and whether we should be thinking about that in, in how we should look at volumes into next year?
Well, I think it's, it's really primarily the cash rate contract that, that's impacted there. You know, at the moment, we have monthly cash rate contracts that go out to 18 months. There, there are already some, there are already some particular characteristics with how those trade post an RBA meeting. I think having a, having a look at that set of contracts and figuring out what do users really need from that, and how do we make it work really well with the fewer meetings is important.
I think one of the things we'll certainly look at is once a decision's made and the RBA meeting's wrapped up, how do we make sure that we've got the, the, you know, the next product that a customer wants to use for hedging is kind of there and ready and available? I, I don't, I don't immediately think that it's necessarily decreasing volumes, but I do think that it's very worthwhile as having a careful look at how people are trading the product anyway, and how they're likely to want to use it in the future. We'll be looking forward to hearing the feedback from the consultation that's out there at the moment on that.
Okay. Thank you.
Thank you. Your next question comes from Andrei Stadnik from Morgan Stanley. Please go ahead.
Good morning. Can I ask, firstly, around the new subscription model on that should drive the electronic further take-up of electronic statements in shares? What kind of revenue and what kind of profit impacts should we expect from that?
Thanks very much, Andre. The, the model that we're looking at, on a like-for-like basis would be revenue neutral. What it'll be enabling is for customers who take up that model to really be more indifferent to the number of HINs and to really make sure they're very incentivized to set up each e-statements, which I know is something that both our, our customers really want to see and our issuers really want to see. You know, helping to provide an incentive for the, for the brokers to do that, I think is going to be really helpful. On a like-for-like basis, I'd say neutral. It will help our customers to do some of the things that they want to do in more scale.
Thank you. Your next question comes from Kieran Chidgey from Jarden. Please go ahead.
Morning, guys. Maybe just starting with a follow-up question on costs. The AUD 13.3 million of CHESS replacement costs highlighted this period in second half, which contributed about 4% to your cost growth this year. Can you just discuss how long you expect those to remain sort of in the cost line? In, in the OpEx line, is that largely first half 2024, and then once the CHESS solution is decided on, those costs drop out from second half 2024, or is there an element of those that sort of remain?
Hi, Kieran. That's, that's the best way to think about that. That's probably the expectation. It's within our 12%-15% guidance for next year, but I'd expect to see the majority of that incurred around that CHESS specific component of that incurred in the first half of FY 2024. That's correct.
At a similar level, Andrew?
Yeah, we, we don't know for, for certain, Kieran. I suppose that goes into the guidance range at this point in time. We haven't got down to that level of, I suppose, accuracy around the guidance there, but you can see what it was in the sort of second half this year. It's within our guidance range, and we'll, we'll give you an update of the first half, of course, and I, I can't really sort of guide with any more precision than that at this point in time.
Okay. When you talk about sort of 25 cost growth moderating, you know, ex those costs this year, you would have been at 8.3.
Yes.
I mean, does that comment on FY 2025 adjust for these temporary costs, or are you talking relative to the total 12-15?
Yeah.
Just that, it, you know, will be lower than that.
Again, you know, it's a couple of years away, and we'll sort of refine that guidance as we progress throughout the financial year. There's a number of things to consider. CHESS, the CHESS costs that you refer to is one element of those, but as you can see, there's also, I suppose, elevated costs in relation to other assurance activities that we're incurring at the moment, special report activity, et cetera. So, hopefully, we can get through the majority of that in this current year, and we'll provide further sort of guidance as we progress throughout the year.
And j ust on that, when will you be able to come out and sort of comment on the outcomes of the expense review? Is that something we should expect at the first half of 2024 result, or is it at the end of 2024?
Yeah. I'd expect to give you an update at the first half result, and then, and then refine that even further for, for guidance statements as we progress through the end of the financial year and, and thinking about FY 2025 at that point in time.
Okay. Just a second question on the net interest income. On the commentary around the spread outlook there remaining or expected to remain fairly stagnant at sort of around 10 basis points through 2024. It just seems like a more cautious comment to what you were hoping for 6 months ago around excess system liquidity starting to reduce through the course of 2024. I guess, what has changed in your mind and why the more cautious outlook there?
Kieran, maybe I'll touch on that. It's, there's certainly, there's definitely uncertainty about the timing and impact of some of that excess cash in the system unwinding, and obviously with Term Funding Facility coming to a close this year, some of that excess will be, will be coming out. Based on, you know, how we're seeing investment profile and, and kind of what we're hearing from our counterparts at the moment, we think that that's a reasonable outlook for the 12 months. We'll obviously be very pleased if that changes, but we think that that's, a reasonable reflection of what we're expecting at this stage.
All right. Thank you.
Kieran, maybe just one other thing I was going to add on your question of cost, because, obviously, you asked a question about the CHESS specific costs. I guess I would just flag in terms of that cost increase that we're seeing. There's also the technology modernization component in there, because, you know, some of the technology investment is obviously capitalized. Some of the investments we've talked about, like the cloud investment and Software as a Service type investment, are not capitalized technology costs. Those are just an impact to bear in mind on the cost line, too.
All right. That's great. Thank you.
Thank you. Your next question comes from Simon Fitzgerald from Jefferies. Please go ahead.
Hi there. My first question relates to the interest income component, basically related to those collateral balances. Andrew, you mentioned that the main driver was the decline in the collateral balances. In the past, I understand that's been an area that's been a little bit difficult to perform at the moment, just given the complexities that are in the market at the moment in terms of surplus and so forth. Just wanting a little bit of comment maybe about how the portfolio performed and maybe some of the other drivers beyond the collateral balances.
Yeah, happy to. It's a very short-dated portfolio, Simon, so the performance was as expected, I suppose, and you can see that in our, our own cash balances, the 295 basis points on average, driving our, sort of, the increased interest income on ASX's cash balances. I suppose the participant balances more generally, effectively, again, you can see the numbers on the slide that we've, we've published today. The 10 basis points is one key component, but the risk haircut is the other component, and that's been pretty, pretty constant over the last couple of years. I think it's come down slightly by about 1 basis point in the current period.
We also produced that number and sort of published that number on a monthly basis, in our monthly activity report. You can actually follow that through in terms of, where that's sitting on a monthly basis.
Gotcha. Second question just relates to the technology and data revenue, which was up 8.5%. Just looking at some of the other drivers there, the ALC cabinet's up 1% and, you know, connections up 4.6, so it probably looks more like price drivers there, but wondering about your capacity for next year to introduce further price increases, if I'm reading that right?
I think it's a mixture of just the regular price review, but also sales of new connections and cabinets, so a combination of things in there. We do a regular pricing review on the technology and data services. Usually, that takes place from January each year. We'll be going into that process of reviewing what the appropriate pricing is in due course, but nothing to share and announce on that at this stage.
Yeah, thank you.
Thanks, Simon.
Thank you. The next question is a follow-up from Andrei Stadnik from Morgan Stanley. Please go ahead.
Good morning. Thank you. Apologies, juggling 3 calls, disconnected accidentally. I can ask a second question, around your data asset? You, you mentioned increased monthly reference pricing, but it's interesting to note, Cboe also has access to Australian reference pricing, and they can bundle that, with, global pricing. How do you think about your asset, your, your data asset going forward, given broader competition from Cboe?
Look, I can't really comment, Andrei, on what Cboe are doing. What I would say is that I think we have really high-quality data assets at ASX, and our focus is really on: How do we make sure that we are making the, the key data that we have here, available in appropriate ways, and in flexible ways, so that customers can actually plug that data in and, and use it in different ways? That's where we've seen quite a bit of change this year as throughout the end-to-end trading life cycle, we're seeing customers more and more wanting to automate their processes, have ways that they can capture machine-readable data from different parts of the value chain.
Look, I expect that to be a continuing trend, focusing on: How can we, how can we really harness more and more of this great data that we have in ways that are entirely appropriate, but also actually give customers the flexibility to use it in the way they want to? I think that that's still a significant opportunity for us.
Thank you so much.
Thanks, Andrei.
Thank you. There are no further questions at this time. I'll now hand back to Helen Lofthouse for any closing remarks.
Great. Well, thank you so much for all your questions today. Today, we announced a solid underlying financial performance for FY 2023, and that demonstrates the strengths of ASX's core businesses during what's been a period of volatility and uncertainty. We're continuing to invest to ensure the long-term sustainability of ASX, and we remain excited about the opportunities ahead. Thank you so much for joining us today.
Thank you.