ASX CEO Helen Lofthouse: Momentum supports outlook for IPOs

The exchange boss Helen Lofthouse says simplification will be the key to unlocking productivity.

ASX Limited CEO Helen Lofthouse at the ASX in Sydney. Picture: John Feder for The Australian.

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

It can be a difficult balance to raise interest rates to moderate inflation without impacting employment, but we’ve seen the RBA do that successfully at this point.

Overall, we’re seeing an improved macro outlook, with confidence increasing around both inflation and interest rates, and combined with current equity market valuations, that is bringing a more positive outlook for IPOs in 2025. It is early days but we’ve certainly seen some renewed activity in new listings in recent months.

One of the great things about being at ASX is that we can see what the whole market is thinking about interest rates at any one time through the pricing of interest rate futures as analysed by our RBA rate tracker tool on the ASX website. Trading of Australian dollar interest rate futures has continued to grow this financial year. In fact, September was the fifth largest month on record for volumes traded.

Looking at the rate tracker now, we can see from recent movements the market is now expecting three, potentially four, interest rate cuts next year – the first is fully priced in for April, a further cut priced in by July, another by September, and a solid chance of a fourth cut by December, although not 100 per cent priced in.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

For ASX, the end of calendar 2025 will mark the midpoint of our five-year strategy. We have made significant commitments to invest in technology and deliver infrastructure upgrades to support the future needs of Australia’s financial markets. Our focus is on delivering for the market.

As we’ve already flagged, our medium-term view in terms of expected capex spend is between $160 million and $180 million annually from FY25 through to FY27.

From a market perspective, we are in the midst of some fundamental industrial and economic shifts, particularly the transition to net zero, which is perhaps the greatest challenge facing this generation. Stable, predictable government policy is a crucial foundation for the net zero transition. And public markets can also play a crucial role in the transition in both supporting efficient capital allocation to the most attractive opportunities, and helping the market manage risk through the transition.

ASX is continuing to invest in market innovation to support the transition. A key example was the launch of our environmental and natural gas futures contracts in July and August this year, which allows participants to more effectively hedge their risk. We know that gas will play a critical role in firming the National Energy Market for many years to come and having the ability to transparently trade and price this resource is in the interest of all Australians.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Simplification needs to be a key part in lifting productivity, whether it’s achieved through policy, regulation or other rules and processes. We all tend to try to solve problems by adding things – whether it’s new legislation or just new operational processes in our organisations. But at ASX we are now looking for opportunities – both with internal processes and in our rule books for customers – to streamline processes to improve both efficiency and effectiveness.

We welcome recent calls from the ASIC Chair for government, regulators and business to work together on reducing complexity in financial services regulation in the interest of handing future generations a more efficient and effective system.

At the same time we need to make sure regulation is keeping pace with how technology and markets are evolving so we can maintain Australia’s competitive advantage. But we need to get the balance right and that includes streamlining processes to reduce cost and complexity so as to not stifle innovation.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

Financial markets adapt quickly to change, including to any new administration. Pre-inauguration, the market is in anticipation mode, but the predicted reforms may take time to be legislated and flow through to economic impact. But the beauty of transparent markets is that they enable investors to respond and navigate whatever happens, and to manage their risks. Our focus is on making sure those markets operate effectively and with high availability, so that our customers have the tools available to them to help them manage those risks.

Specifically for ASX as a business, geopolitics is an ever-present factor – we compete for listings, capital and trading volumes every day on a global basis.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

Before the pandemic, as an organisation that is mainly based in one office, we hadn’t yet encountered a situation where remote working was the norm. The pandemic catapulted us into getting much better at working from home, and we’ve been able to continue and maintain that lift in capability.

Equally, two years after Covid, the culture-carrying benefits of connection, collaboration and relationship building from time spent in an office environment are also apparent. A key focus for me since becoming CEO is how we really make flexible work suitable for the individual, team and the organisation in an optimal way.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

For ASX, one of the impacts of AI is that it’s one of the multiple drivers of a growing demand for data. As a data-rich environment, we see that growing demand as a key growth opportunity, and we are investing in ways to scale that in an appropriate way.

We are also excited about the benefits AI could bring to improve efficiency – both for ASX and our customers. We are at a very early stage though, with a key focus right now being on ensuring we have the right data governance to be able to leverage AI capabilities safely. As the operator of significant parts of the region’s financial market infrastructure, we have a responsibility when it comes to having the right controls and security around data. We’ll continue to assess AI opportunities but with security and risk firmly in mind.