ASE Annual Report 2017 | Quarterlytics

FY2017 Annual Report · ASE

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ASX Limited
Annual Report 2017

Who we are

ASX operates at the heart of Australia’s financial markets.

Our integrated listings, trading, clearing and settlement businesses
provide customers with efficient access to and exchange of capital,
management of risk, and provision of data and other solutions.
ASX operates across multiple asset classes including equities,
fixed income, commodities and energy.

ASX operates and invests in the infrastructure that promotes
the stability and development of Australia's financial markets.
We advocate for regulations that support investors and issuers,
promote market integrity and strengthen Australia’s global
competitiveness.

ASX is the global leader in A$ and NZ$ financial markets, one of the
top 10 securities exchanges in the world and the largest interest
rate derivatives market in Asia. We have trading and information
hubs in many of the world’s major financial centres, attract company
listings from all around the globe and are based in Australia, which
has one of the five largest investable assets pools in the world.

Our vision is to be the world’s most respected financial marketplace.

More information about ASX can be found at www.asx.com.au

Left: Listing ceremony for Audinate Group Limited, June 2017. Right: ASX’s Australian Liquidity Centre.

Contents

Financial highlights

Letter from the Chairman
and the CEO

ASX Limited Board

Corporate governance

Environment, social and governance

Remuneration report

Operating and financial review

Directors’ report

Statutory report – financial
statements

Key financial ratios

Transaction levels and statistics

Shareholder information

Directory

ASX Limited ABN 98 008 624 691

ASX’s AGM will be held on
Tuesday 26 September 2017
at 10am Sydney time, in the
ASX Auditorium, lower ground
floor, Exchange Square,
18 Bridge Street, Sydney.

Financial highlights

Operating revenue
$million

Profit after tax
$million

• Operating revenue $764.1 million, up 2.4%

• Profit after tax $434.1 million, up 1.9%

617.4

658.3

700.7

746.3

764.1

348.2

383.2

397.8

426.2

434.1

FY13

FY14

FY15

FY16

FY17

FY13

FY14

FY15*

FY16

FY17

Operating revenue as per ASX's segment reporting

*Underlying proﬁt in FY15 $403.2 million

Earnings per share
Cents

Dividends per share
Cents

• EPS 224.5 cents per share, up 1.9%

• Final dividend 99.8 cents per share fully franked, up 0.8%

• Total FY17 dividends 201.8 cents per share, up 1.9%

• Payout ratio 90% of underlying profit after tax maintained

195.5

198.5

205.7

220.4

224.5

82.3

89.9

95.1

99.0

99.8

FY13

FY14

FY15*

FY16

FY17

FY13

FY14

FY15

FY16

FY17

*Underlying EPS in FY15 208.4 cents

Interim

Final

87.9

88.2

92.3

99.1

102.0

ASX Annual Report 2017 Financial highlights / 1

Letter from the Chairman and the CEO

The last 12 months was another
period of significant achievement for
ASX in which a number of important
milestones were reached.

ASX continues to invest in the infrastructure that positions Australia’s
financial markets for the future. Expenses rose 6.0% to $180.9 million
and capital expenditure was $50.3 million, both in line with market
guidance. The spending relates to continued infrastructure upgrades
as well as ASX initiatives such as the new futures trading system,
development of the Bank Bill Swap (BBSW) platform and progress
with distributed ledger technology (DLT) as a potential solution to
replace CHESS.

Total dividends announced for FY17 were 201.8 cents per share,
up 1.9%. ASX continues to pay out 90% of our underlying profit in
dividends.

More detail on ASX’s financial performance can be found in the
Operating and Financial Review on pages 28 to 36.

Strategic initiatives

ASX’s vision is to be the world’s most respected financial marketplace.
Our strategies to achieve this goal include:

• building a diverse ecosystem of products, services and stake-

holder partnerships

• providing innovative solutions and technology for our customers

• maintaining trust, integrity and resilience in our relationships,

systems and brand

• strengthening the collaborative culture among our people

• being customer centric in everything we do.

ASX is privileged to operate in an environment underpinned by
Australia’s strong macro-economic drivers. These include one of the
world’s largest savings pools, highly regarded regulatory framework
and more than 25 years of uninterrupted economic growth. Alongside
this, Australia continues to have one of the world’s highest rates
of share ownership, with the latest ASX Australian Investor Study
(published in May 2017) showing that 37% of Australian adults, or
6.9 million people, hold investments that are available through a
financial exchange.

Rick Holliday-Smith
Chairman

Dominic Stevens
Managing Director and CEO

Dear fellow shareholder,

On behalf of the Board of ASX Limited (ASX), we are pleased to present
our 2017 Annual Report.

The last 12 months was another period of significant achievement for
ASX in which a number of important milestones were reached. We
upgraded the trading platform for our largest business, raised the
profile of ASX’s listings and clearing franchise internationally, and
marked the 30th anniversary of ASX’s formation, when Australia’s six
state-based stock exchanges merged to establish one national market.

The benefits of the 1987 amalgamation still resonate, with ASX’s global
scale, connectivity and reputation attracting increasing numbers of
companies, traders and investors from home and abroad. It paved
the way for ASX’s demutualisation and listing in 1998, and the merger
with the Sydney Futures Exchange in 2006, which brought equi-
ties and futures together to create one of the world’s first multi-
asset class, integrated exchange groups. The innovation we demon-
strated three decades ago continues today as we seek better ways
to service our customers and strengthen the resilience and compet-
itiveness of Australia’s financial markets.

Financial performance

ASX continued its solid financial performance in financial year 2017
(FY17), with revenue growth in most major areas of the business.
The exception was the Listings and Issuer Services business, which
was flat compared to FY16 and characterised by less capital raised
but a greater number of new listings, the most in six years. ASX’s
performance was driven by pockets of volatility in futures and equity
markets, and strong progress on key initiatives such as Centre Point
and OTC Clearing.

Total Group revenue (as per ASX's segment reporting) grew by 2.4%
to $764.1 million, an increase of $17.8 million, and profit after tax rose
1.9% or $7.9 million to $434.1 million.

/ ASX Annual Report 2017 Letter from the Chairman and the CEO

Letter from the Chairman and the CEO continued

While ASX benefits from these macro tailwinds, we also develop our
own initiatives to leverage opportunities for our company’s growth.

Derivatives and OTC Markets

We made good progress pursuing these initiatives in FY17.

Listings and Issuer Services

In FY17, we had success attracting foreign and technology companies
to list on ASX. This has positive flow-on effects throughout the finan-
cial community and gives local investors exposure to international
opportunities. ASX welcomed 39 offshore companies from countries
such as Israel, New Zealand, Singapore and the US, bringing the total
number of ASX foreign listings to 266. This number has doubled in the
last four years. Technology listings rose by 40, with the sector now
the third largest on ASX with over 200 listings in total.

Number of foreign and technology companies

300

250

200

150

100

In March 2017, ASX successfully implemented a new futures trading
system, replacing the platform that had been in place, with periodic
updates, since the late 1990s.

The new system is contemporary and uses global standard protocols.
It provides customers with richer functionality, improved performance
and reduced development and maintenance costs. It also offers a
new way of working with our customers, with functionality allowing
ASX to diagnose and discuss issues proactively with customers. The
smooth go-live was helped by the extensive development and indus-
try-wide testing program undertaken by ASX in close collaboration
with customers.

ASX also expanded the operating hours of our OTC Clearing business
to clear interest rate swaps 24 hours a day. Value cleared in this
service was up 88% in FY17 with a record $1,542 billion notional value
cleared in the June quarter. We expect this to grow further when we
roll out the service to clients of dealers (in addition to the existing
dealer-to-dealer service) towards the end of 2017.

Over the past five years, activity on ASX from offshore futures inves-
tors and traders has grown steadily. Global access to ASX markets
has expanded in recent years via connections to financial hubs in
Chicago, London, Singapore and Hong Kong. ASX’s overnight futures
trading session, open from 5pm to 7am AEST, now accounts for 31%
of all futures trading activity, up from 22% in FY12.

FY13

FY14

FY15

FY16

FY17

Foreign companies

Technology companies

Trading Services

ASX has developed a ‘sweet spot’ for listing companies in the $50-500
million market capitalisation range. The depth of our market’s liquidity,
our contemporary rules and guidance, and the quality of our corpo-
rate governance standards are among ASX's advantages. The new
admission criteria that ASX introduced in December 2016 have lifted
the bar for entry to the ASX market, while maintaining a pathway for
companies to list and access capital across their lifecycle.

The expansion of ASX’s listings franchise in FY17 included growth
in exchange-traded products (ETPs) such as ETFs – especially those
offering international exposure, which now represent 42% of total ETP
funds under management. ETPs have grown over the last five years
from 84 products valued at $5.2 billion to more than 213 products
valued at over $29.5 billion today.

In FY17, ASX received regulatory approval to expand the range of
investment products retail clients can apply for and redeem through
the mFund Settlement Service. The mFund service provides faster
and more convenient access to unlisted managed funds. The ability
to offer a wider range of funds makes the service more attractive to
brokers, advisers and their clients, including those in the growing SMSF
sector. The level of funds under management within mFund doubled
over the course of the year to more than $370 million.

The strategic investments ASX is making in the Trading Services
business continue to deliver benefits. The value traded in Centre
Point, which gives equity market investors greater choice and control
over their orders, rose 36% in FY17 and now represents 10% of ASX
on-market value traded.

The Australian Liquidity Centre (ALC), ASX’s purpose-built, state-
of-the-art data centre, which provides customers with a range of
communication, execution and information services, also saw an
increase in activity. The number of hosted customer cabinets rose from
231 to 285, and multilateral cross-connections between customers
within the ALC increased from 819 to 871. The ALC is Australia's most
diverse and vibrant financial markets ecosystem.

ASX commenced as the administrator of the systemically important
BBSW benchmark on 1 January 2017, and began calculating and
publishing the rate in July 2017. ASX is the natural home for the
administration of this benchmark and already administers the bond
futures settlement price, which is also a systemically important
benchmark. We understand the importance of BBSW to the health
and integrity of our markets, and have the experience, technical
capability and customer relationships to maintain BBSW as a robust
and reliable benchmark.

Equity Post-Trade Services

A major focus for ASX in FY17 was on options to replace CHESS. CHESS
is the system that underpins the post-trade processes of Australia's
share market. Its functionality has been world-leading. It digitised
the ownership of securities in Australia, resulting in the elimination
of paper-based share certificates and the recording of legal title to
securities in a ‘name on register’ system.

ASX Annual Report 2017 Letter from the Chairman and the CEO / 3

Letter from the Chairman and the CEO continued

The report found a high level of risk awareness at the top end of
corporate Australia and a commitment to take further action. The
report provides a framework for businesses of all sizes to better
evaluate their effectiveness in addressing cyber risk and identify
opportunities to improve their cyber resilience. This is of great
importance to the millions of investors who hold shares in Australian
companies. The ASX 100 Cyber Health Check Report can be found
here: www.asx.com.au/ASX100-Cyber

Board renewal

On 17 May 2017, ASX welcomed Robert Priestley as a non-executive
director to the Board.

Robert has over 30 years’ experience in the financial services indus-
try, including as a former Chief Executive Officer of J.P. Morgan
Australia & New Zealand and a member of the bank’s Asia Pacific
Management Committee. He has strong leadership, strategy and
governance skills, and is already offering valuable insights into the
needs and priorities of some of ASX’s largest customers.

We look forward to introducing Robert to shareholders when
he stands for election at ASX’s Annual General Meeting on 26
September 2017.

On behalf of the Board, we are grateful to all ASX employees for
their high standards and hard work throughout the year.

ASX is in a solid position and well-placed for a prosperous future.

Thank you for your ongoing support.

Rick Holliday-Smith
Chairman

Dominic Stevens
Managing Director and Chief Executive Officer

CHESS has been a highly robust and reliable platform for over 20
years. Its replacement offers a once in a generation opportunity to
significantly improve operating efficiencies for the whole industry.

We are obtaining input from those who connect to CHESS or rely
on its integrity. This will help ASX build a detailed understanding of
what our stakeholders want from the new system, and ensure that
it meets the highest security, resilience and performance standards.
We have created a dedicated public website for information and
transparency about the CHESS replacement project: www.asx.com.
au/services/chess-replacement.htm

ASX’s post-trade processes, and the regulatory settings within which
they operate, play a critical role in ensuring certainty of legal title
to securities and settlement finality. This supports systemic stabil-
ity and the confidence that investors have in Australia’s financial
markets.

ASX has been exploring DLT (commonly known as blockchain) as a
possible replacement for CHESS. DLT has the potential to create a
‘single source of truth’ for all transactions that cannot be altered
and which can be distributed to those who are permissioned to
access it. We are developing an enterprise-grade DLT system with
our partner Digital Asset Holdings. This will enable us to determine
its suitability as a replacement for CHESS. We are on track to make
an assessment on its suitability towards the end of this calendar
year. ASX believes there is a real opportunity to simplify how our
marketplace works and unlock a new era of efficiency and innova-
tion. By working with our customers, we can develop the solution
that best positions Australia’s market for the future.

ASX operational resilience and cyber health check

ASX operates a number of complex technology platforms that
are critical to the functioning and integrity of Australia’s financial
markets. We manage the operational risks associated with this
infrastructure by investing in the maintenance of our systems,
forming relationships with specialist technology providers, and
regularly implementing improvements. During the year we continued
to invest in our infrastructure and will accelerate these upgrades
in 2018. We recognise that the confidence of the many users who
rely on ASX’s infrastructure depends upon the resilience of our
technical and operating systems.

ASX also appreciates the role we can play to raise awareness of
cyber risk management with Australian business. This includes
managing our own cyber resilience as a provider of critical financial
market infrastructure.

ASX considers cyber security in terms of the ecosystem in which we
operate – from our business partners and customers, through to
our vendors and professional service providers. We liaise regularly
with cyber security bodies and benchmark our arrangements against
global best practice standards. Our cyber resilience is assessed by
Australian regulators.

In April 2017, ASX launched the ASX 100 Cyber Health Check Report
in collaboration with government, ASIC and audit firms. The Health
Check was the first attempt to gauge how the boards of Australia’s
largest listed companies view and manage their exposure to cyber
risk. Responses were received from 76 of the top 100 listed compa-
nies, who were invited to participate on a voluntary basis.

/ ASX Annual Report 2017 Letter from the Chairman and the CEO

ASX Limited Board

Rick Holliday-Smith
Independent Chairman

BA (Hons), FAICD

Dominic Stevens
Managing Director and CEO, Executive Director

BCom (Hons)

Mr Rick Holliday-Smith has served as Chairman of ASX since March
2012 and as a director since July 2006. He was previously Chairman
of SFE Corporation Limited from 1998 until 2006.

Mr Dominic Stevens was appointed Managing Director and CEO of
ASX in August 2016. He was an independent non-executive director
of ASX from December 2013 until his appointment as CEO.

Mr Stevens is a director of the ASX Group clearing and settlement
licensees and their intermediate holding companies. He is also a
director of ASX Compliance.

Mr Stevens has over 30 years’ experience in financial markets. He
was CEO of Challenger Limited from 2008 to 2012, before which he
was the company’s Deputy CEO and head of capital, risk and strategy.

Prior to Challenger, he held senior positions during a long career
at Bankers Trust Australia, where he had responsibility for the
Australian derivatives and global metals and agricultural commodity
derivatives businesses.

Mr Holliday-Smith is Chairman of ASX Compliance, the Nomination
Committee and the intermediate holding companies of the ASX
clearing and settlement licensees. He is also a member of the Audit
and Risk, and Remuneration Committees.

Mr Holliday-Smith has global executive and leadership experience
in capital markets and derivatives, and a background in venture
capital activities.

His previous roles include CEO of futures and options trading firm
Chicago Research and Trading (CRT), President responsible for global
trading and sales at Nations Bank-CRT (a predecessor of Bank of
America), both based in Chicago, and Managing Director of Hong
Kong Bank Limited (a wholly owned merchant banking subsidiary
of HSBC Bank), based in London.

Mr Holliday-Smith was appointed Chairman of Cochlear Limited in
July 2010, having joined the board in March 2005. He has been a
director of Servcorp Limited since October 1999 and is a Member
of the Macquarie University Faculty of Business and Economics
Advisory Board.

Yasmin Allen
Independent, Non-Executive Director
BCom, FAICD

Melinda Conrad
Independent, Non-Executive Director

MBA, FAICD

Ms Yasmin Allen was appointed a director of ASX in February 2015.
She is a member of the Audit and Risk Committee.

Ms Melinda Conrad was appointed a director of ASX in August 2016.

Ms Allen is also a director of ASX Clear (Futures) Pty Limited and
Austraclear Limited, the ASX Group clearing and settlement licen-
sees for Australia’s derivatives, OTC and debt markets, and their
intermediate holding companies.

Ms Allen has extensive financial services, strategy and corporate
governance experience, gained during a career of over 20 years in
finance and investment banking.

She was formerly a vice president at Deutsche Bank, a director at
ANZ Investment Bank and an associate director at HSBC Group.

Ms Allen was appointed a director of Cochlear Limited in August
2010 and Santos Limited in October 2014. Ms Allen’s previous
appointments include director of Insurance Australia Group Limited
between November 2004 and September 2015.

Ms Allen is also a director of the George Institute for Global Health
and the National Portrait Gallery, and a member of the Australian
Government Takeovers Panel.

Ms Conrad has over 20 years’ experience in business strategy
and marketing, and brings skills and insights as an executive and
director from a range of industries including retail, financial services
and healthcare.

Ms Conrad has been a strategy and marketing adviser, an executive
with Colgate-Palmolive, and founded and managed a retail business.

She was appointed a director of Caltex Australia Limited in March
2017 and OFX Group Limited (formerly OzForex Group) in September
2013. Ms Conrad’s previous appointments include a director of David
Jones Limited between July 2013 and August 2014, APN News and
Media Limited between January 2012 and February 2013, and Reject
Shop Limited between August 2011 and June 2017.

Ms Conrad is also a director of the Centre for Independent Studies
and the George Institute for Global Health, and a member of the
ASIC Director Advisory Panel.

ASX Annual Report 2017 ASX Limited Board / 5

ASX Limited Board continued

Dr Ken Henry AC
Independent, Non-Executive Director

BCom (Hons), PhD, DB h.c, FASSA

Peter Marriott
Independent, Non-Executive Director

BEc (Hons), FCA, MAICD

Dr Ken Henry was appointed a director of ASX in February 2013.
He is a member of the Audit and Risk Committee.

Mr Peter Marriott was appointed a director of ASX and Chair of the
Audit and Risk Committee in July 2009.

Dr Henry is a director of ASX Clear Pty Limited and ASX Settlement
Pty Limited, the ASX clearing and settlement licensees for Australia’s
equity markets, and their intermediate holding companies.

Dr Henry has extensive experience as an economist in Australia and
overseas, and has worked as a senior policy adviser to successive
Australian governments.

Dr Henry served as the Secretary of the Federal Department of the
Treasury from 2001 to 2011. He is Chairman of the Sir Roland Wilson
Foundation at the Australian National University, Governor of the
Committee for Economic Development of Australia (CEDA), and a
member of the Advisory Board of the John Grill Centre for Project
Leadership at the University of Sydney.

He is Chairman of Austraclear Limited, the securities settlement
facility licensee for Australia’s debt markets, and a director of
each of the other ASX clearing and settlement licensees and their
intermediate holding companies.

Mr Marriott has spent over 30 years in senior management roles
in the finance industry, spanning international banking, finance
and auditing.

Mr Marriott was Chief Financial Officer of Australia and New Zealand
Banking Group Limited (ANZ) from 1997 to May 2012. He also spent
two years as Group Head of Risk Management. Prior to his career
at ANZ, he was a partner of KPMG Peat Marwick specialising in the
banking and finance, and information technology sectors.

Dr Henry has been Chairman of National Australia Bank Limited
since December 2015, having joined the board in November 2011.

Mr Marriott was appointed a director of Westpac Banking
Corporation in June 2013.

Robert Priestley
Independent, Non-Executive Director

BCom

Heather Ridout AO
Independent, Non-Executive Director

BEc (Hons)

Mr Robert Priestley was appointed a director of ASX in May 2017.

Mrs Heather Ridout was appointed a director of ASX in August 2012.

Mr Priestley was formerly the Chief Executive Officer of J.P. Morgan
Australia & New Zealand, and a member of the bank’s Asia Pacific
Management Committee, roles he held for 15 years. He became the
Non-Executive Chairman of J.P. Morgan Australia & New Zealand
after he retired from his executive position.

In a career spanning over 30 years, Mr Priestley worked at JPMorgan
Chase & Co. for 23 years, including as CEO of the ASEAN Region,
Head of Global Emerging Markets and Head of International Fixed
Income for Europe, Middle East and Africa Region (based in London),
and Head of International Fixed Income, Asia Pacific Region (based
in Hong Kong).

Prior to J.P. Morgan, Mr Priestley held senior financial markets
roles, including at Macquarie Bank, after starting his career at Price
Waterhouse. He has been a director and Chairman of the Australian
Financial Markets Association (AFMA), a member of the Business
Council of Australia and a director of the Australian Business and
Community Network (ABCN).

He is a director of the Banking and Finance Oath, a Council member
of the ABCN and a member of the Tennis NSW Corporate Advisory
Board.

Mrs Ridout is also a director of ASX Compliance, Chair of the
Remuneration Committee, and a member of the Nomination
Committee.

Mrs Ridout is a company director with a long history as a leading
figure in the public policy debate in Australia. She was formerly
Chief Executive of the Australian Industry Group, a major national
employer organisation representing a cross-section of industry
including manufacturing, construction, defence, ICT and labour
hire, until April 2012.

Mrs Ridout was appointed Chair of the AustralianSuper Trustee
Board in May 2013, having joined the board in 2007. She has also
been a director of Sims Metal Management Limited since September
2011 and a director of the Australian Chamber Orchestra since
December 2012.

Mrs Ridout is a member of the ASIC External Advisory Panel.

Mrs Ridout’s previous appointments include member of the boards
of the Reserve Bank of Australia from February 2012 until February
2017, Infrastructure Australia, and the Australian Workforce and
Productivity Agency, and a member of the Henry Tax Review panel,
the Climate Change Authority and the Prime Minister’s Taskforce
on Manufacturing.

/ ASX Annual Report 2017 ASX Limited Board

ASX Limited Board continued

Damian Roche
Independent, Non-Executive Director

BCom

Board composition

At the date of this report, there are ten directors, whose names,
skills and experience are detailed on pages 5 to 7.

Mr Damian Roche was appointed a director of ASX in August 2014.

The Board is committed to maintaining the diversity of the Board.
Thirty percent of ASX's directors are female.

Mr Roche is also a director of ASX Compliance, and ASX Clear
(Futures) Pty Limited and Austraclear Limited, the ASX Group clearing
and settlement licensees for Australia’s derivatives, OTC and debt
markets, and their intermediate holding companies.

Mr Roche has 20 years’ experience in global investment banks, with
extensive cross-asset class expertise spanning the equities, fixed
income and commodities markets, with a focus on the Asia Pacific
region, including Australia.

Mr Roche was a member of the global Corporate and Investment
Bank Operating Committee for J.P. Morgan. His most recent role at
the bank was as Head of Markets and Investor Services, Sales and
Distribution for Asia Pacific, based in Hong Kong.

Board renewal and succession planning

The Board regularly reviews its composition and succession plans.

The skills and experience of the Board reflect ASX’s role as the
provider of critical infrastructure to Australia’s financial markets
and its leading position in the Asia Pacific region.

Board skills matrix

The Board uses the skills matrix below to guide its assessment of
the skills and experience of current non-executive directors, and to
identify any gaps in the collective skills of the Board.

Peter Warne
Independent, Non-Executive Director

BA, FAICD

Mr Peter Warne was appointed a director of ASX in July 2006. He
was previously a director of SFE Corporation Limited from 2000 to
2006. He is also a member of the Audit and Risk, Nomination and
Remuneration Committees.

Mr Warne is Chair of ASX Clear (Futures) Pty Limited, the ASX
clearing and settlement licensee for Australia’s derivatives and OTC
markets, a director of Austraclear Limited, the securities settlement
facility licensee for Australia’s debt and OTC markets, and a director
of their intermediate holding companies.

Mr Warne has over 30 years’ experience in financial markets and
brings a deep practical and technical understanding of debt, equities
and derivatives markets, and risk management.

Category
Executive
leadership

Strategy

Financial acumen

Risk and
compliance

Public policy

Information/
technology/
digital

Business
development

People and
change
management

Corporate
governance

International
exchange
experience

Explanation

Successful career as a CEO or senior executive.

Define strategic objectives, constructively question
business plans and implement strategy.

Accounting and reporting, corporate finance and
internal controls, including assessing quality of
financial controls.

Forward-looking, able to identify the key risks to
the organisation and monitor effectiveness of risk
management frameworks and practices.

Public and regulatory policy, including impact on
markets and corporations.

Use and governance of critical information technol-
ogy infrastructure, digital disruption and information
monetisation.

Commercial and business experience, including
development of product, service or customer
management strategies, and innovation.

Overseeing and assessing senior management,
remuneration frameworks, strategic human resource
management and organisational change.

Knowledge, experience and commitment to the
highest standards of governance.

International financial markets or exchange groups,
including post-trade services and relationships with
financial market participants.

Financial services
experience

Broking, funds management, superannuation and/or
investment banking activities.

Mr Warne is a director of Securities Exchanges Guarantee
Corporation and NSW Treasury Corporation.

The Board considers that individually and collectively, the directors
have an appropriate mix of skills, experience and expertise.

Mr Warne has been Chairman of Macquarie Bank Limited and
Macquarie Group Limited since April 2016, having served as a
director since July 2007.

Mr Warne’s previous appointments include Chairman of OFX Group
Limited (formerly OzForex Group) between September 2013 and
November 2016, Chairman of Australian Leisure and Entertainment
Property Management Limited between September 2003 and May
2017, Deputy Chairman of Crowe Horwath Australasia Limited
between May 2007 and January 2014, and Adjunct Professor at
the University of Sydney Business School between November 2011
and November 2014.

ASX Annual Report 2017 ASX Limited Board / 7

Corporate governance

ASX’s corporate governance framework

Responsibilities of the Chairman

ASX’s governance arrangements have been consistent with the
third edition of the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (Principles) through-
out the reporting period, except for the interim arrangements in
place during the search for ASX’s new CEO (appointed 1 August
2016). Those interim arrangements were detailed on page 7 of ASX’s
2016 Annual Report published on 18 August 2016.

This statement, including details of the ASX Limited Board on pages
5 to 7, is current as at 17 August 2017 and has been approved by
the Board.

More information on ASX’s corporate governance is available on
ASX’s website.

Board of directors

Overview of the Board’s role and responsibilities

Responsible
for

Approves/
reviews

Oversees

• performance of the ASX Group
• enhancing and protecting the reputation of ASX
• reporting to and communicating with shareholders
• corporate strategy, annual budget and financial plans
• major corporate initiatives
• performance of the CEO
• conduct of the ASX Group consistent with its licence
obligations and public policy objectives of financial
market integrity and financial system stability

• financial performance
• effectiveness of Management processes
• ASX’s culture
• process for identifying significant risks facing ASX
and control, monitoring and reporting mechanisms

• executive succession plans

The responsibilities of the Board are detailed in the Board charter.
The Board’s conduct is also governed by ASX’s constitution.

The names of ASX’s directors, their qualifications and tenure are
set out on pages 5 to 7. ASX director biographies are also published
on ASX’s website.

Delegation to committees, subsidiary boards and
Management

The Board has established three committees to assist it to discharge
its duties (refer page 10).

The clearing and settlement (CS) boards focus on risk management
and oversight of the clearing and settlement operations (refer
page 10).

Day-to-day management and operations are delegated to
Management (refer page 11).

ASX's Chairman:

• is independent and non-executive

• leads the Board in its duties to ASX

• facilitates effective Board meeting discussion

• acts as the Board’s contact point for senior external stakehold-

ers, including shareholders, regulators and media

• oversees processes and procedures to evaluate the perfor-

mance of the Board, its committees and individual directors.

The CEO may not be or become Chairman.

Director appointment and election

Before appointing a director, ASX undertakes comprehensive refer-
ence checks including education, employment, character, criminal
history and bankruptcy checks. It is a condition of appointment
that any new director is not a disqualified person. Directors make
an annual declaration to this effect.

Directors are generally elected for three years. Retiring directors
are not automatically re-appointed. Any director (except the CEO)
who has been appointed during the year must stand for election
at the next Annual General Meeting (AGM).

Mr Damian Roche and Mr Peter Warne will retire by rotation. They
are standing for re-election at the 2017 AGM and are unanimously
supported by the directors. Mr Robert Priestley was appointed as a
director on 17 May 2017. He will stand for election at the 2017 AGM.
His election is unanimously supported by the directors.

Director induction and training

New directors receive a letter of appointment. This outlines ASX’s
expectations about director time commitment, compliance with
ASX policies and regulatory requirements. An induction process
is coordinated by Company Secretariat. As part of the induction
process, new directors meet with senior executives shortly after
their appointment to receive briefings on operational matters and
strategic initiatives.

The Board keeps up-to-date with relevant market and industry
developments by regular briefings at Board meetings, Board work-
shops, meetings with customers and site visits.

Performance reviews

The performance of the Board, its committees and individual direc-
tors are reviewed each year. The Chairman holds discussions with
individual directors when evaluating their performance. These
evaluations took place for FY17. The Board takes this evaluation into
consideration when recommending directors for election.

/ ASX Annual Report 2017 Corporate governance

Corporate governance continued

Director independence

The ASX Board policy on independence and the ASX Board charter require that a majority of directors are independent. The ASX Board
policy on independence includes guidelines for assessing the materiality of directors’ relationships that may affect their independence.

There is no limit on director tenure. Mr Rick Holliday-Smith and Mr Peter Warne have been directors of ASX Limited for more than 10 years.
In FY17, the Board reviewed and determined that their tenure has not impacted on their independence. The Board noted the expertise,
judgement, industry knowledge and understanding of ASX’s operations brought by each director.

Each of ASX’s non-executive directors has been assessed as independent.

Directors are required to disclose all interests that may potentially conflict with their duties. If there is a possibility of a conflict of interest
with a matter being considered or voted upon, the director is not permitted to be present for the consideration of that matter or vote,
and will not be provided with commercially sensitive information related to the matter.

Director attendance at meetings

Details of director attendance at meetings up to 30 June 2017 are set out below. Provided there is no conflict of interest, directors are
also invited to, and frequently attend, meetings of Board committees of which they are not members.

All directors receive copies of agendas, papers and minutes of committee meetings to help ensure they remain equally informed, regardless
of whether they are appointed to particular committees.

Director name
Rick Holliday-Smith (Chairman)1
Dominic Stevens

Yasmin Allen
Melinda Conrad2
Ken Henry
Peter Marriott3
Robert Priestley4
Heather Ridout

Damian Roche

Peter Warne

Scheduled Board meetings Audit and Risk Committee

Nomination Committee

Remuneration Committee

Held
8

Attended
8

Held
3

Attended
3

Held
7

Attended
7

Held
5

Attended
5

1 Rick Holliday-Smith was reappointed to the Audit and Risk Committee and Remuneration Committee on 17 August 2016.
² Melinda Conrad was appointed a director of ASX Limited on 1 August 2016.
3 Peter Marriott retired from the Remuneration Committee on 17 August 2016.
4 Robert Priestley was appointed a director of ASX Limited on 17 May 2017.

Access to information, Management and advice

Company secretaries

Directors have access to Management to request information.
Directors are entitled, with the approval of the Chairman, to obtain
independent professional advice relating to their role as an ASX
director at ASX’s expense.

The Board is responsible for the appointment of company secre-
taries. The Company Secretary is accountable directly to the Board,
through the Chairman, on all matters to do with the proper function-
ing of the Board. Details of ASX’s company secretaries are on page 37.

Director shareholding policy and remuneration

Board policy is that non-executive directors should accumulate
at least 5,000 ASX shares (12,000 for the Chairman) within three
years of their appointment. All directors with a tenure of more than
three years meet this guideline. Directors with less than three years
tenure are progressing towards achieving this guideline.

ASX’s remuneration framework is described in detail in the
Remuneration Report, which starts on page 17.

ASX Annual Report 2017 Corporate governance / 9

Corporate governance continued

Board committees and subsidiary boards

ASX Board committees
The ASX Board has established the committees detailed below. Each is chaired by an independent director. Each committee’s charter sets
out its role, responsibilities, composition and structure. Committee charters are reviewed annually and published on ASX’s website. The
committees and subsidiary boards report to each other on relevant matters. Minutes of committee meetings are provided to the Board.

Audit and Risk Committee

Nomination Committee

Remuneration Committee

• integrity of ASX’s consolidated financial reports
• adequacy of ASX’s corporate reporting process
• systems of risk management, internal control
and legal compliance (except matters specifi-
cally overseen by ASX subsidiaries)

• monitor ASX’s framework for identifying and
mitigating cyber risks, and managing ASX’s
cyber resilience

• internal audit oversight
• external audit liaison and monitoring of perfor-

mance and effectiveness

• receive audit reports and approve the audit plan
• review external auditor independence, includ-
ing considering the level of non-audit work
carried out by the external auditor

• monitor ASX’s risk culture

• Peter Marriott (Chair)
• Yasmin Allen
• Ken Henry
• Rick Holliday-Smith (from 17 August 2016)
• Dominic Stevens (up to 1 August 2016)
• Peter Warne

Functions and responsibilities
• review process for nomination and selection

of ASX directors and CEO

• remuneration for ASX staff and non-executive

directors

• identify desirable director competencies and

• incentive framework for ASX staff including the

experience

CEO and senior executives

• review director performance and the process

• achievement against gender diversity

for reviewing contributions

• review ASX director succession plans and

induction programs

• set and review Board gender diversity

strategies

objectives, including remuneration equality
• compliance of remuneration arrangements
with Financial Stability Standards and other
regulatory requirements

Committee members

• Rick Holliday-Smith (Chair)
• Heather Ridout
• Peter Warne

• Heather Ridout (Chair)
• Rick Holliday-Smith (from 17 August 2016)
• Peter Marriott (up to 17 August 2016)
• Peter Warne

ASX clearing and settlement subsidiaries

Compliance and conflict handling arrangements

ASX has four subsidiary companies that hold CS licences to operate
clearing and settlement facilities, and two intermediate holding
companies. The CS boards focus on risk management and oversight
of the operations of the CS subsidiaries.

The responsibilities of these boards include the management of
clearing and settlement risk, and compliance with the Financial
Stability Standards determined by the Reserve Bank of Australia
(RBA).

The CS boards’ charter sets out further details regarding their
functions and governance.

ASX Clear and ASX Settlement are the sole providers of clearing
and settlement arrangements for Australia’s cash equities market.
The boards of ASX Clear and ASX Settlement are comprised of
six directors. Each has three directors who do not sit on the ASX
Limited Board. These three directors can form a quorum and do
meet separately, constituted as the board of ASX Clear and ASX
Settlement, to determine matters that require consideration of
commercially sensitive information if another market operator
or listing venue is obtaining services from, or access to, ASX’s CS
facilities. These boards also oversee Management’s handling of
commercially sensitive information, provision of services or access
relating to other market operators and listing venues. ASX Limited
directors do not attend or receive copies of papers or minutes for
such meetings. Management attendance is limited to employees
given permission by the relevant market operator or listing venue.

All directors, other than ASX’s CEO, are independent non-execu-
tives. The biographies of the CS board directors are available on
ASX’s website.

/ ASX Annual Report 2017 Corporate governance

Compliance and enforcement functions
The statutory obligations of the ASX Group licensees include the
obligation to have adequate arrangements for operating their
markets and clearing and settlement facilities. These arrangements
may involve a self-regulatory structure, or the appointment of an
independent person or related entity. They must include arrange-
ments for monitoring and enforcing compliance with ASX’s operating
rules, and for handling conflicts of interest.

Over the past 10 years, the compliance and conflict handling arrange-
ments put in place by the ASX Group licensees have involved the
appointment of a related entity, ASX Compliance Pty Limited.
However, the licensees remain responsible for their own obligations.

The role and responsibilities of the ASX Compliance board are set
out in its board charter. ASX’s Chief Compliance Officer reports
directly to the ASX Compliance board in relation to the performance
of the ASX Compliance function, including matters regarding listed
company and participant compliance with ASX’s operating rules.

Conflict and information handling arrangements
ASX has well-established arrangements to address the potential
for actual and perceived conflicts. These include:

• governance arrangements, including for ASX's self-listing

• customers, competitor and supplier arrangements

- licence obligations including the ‘review party’ framework

- information handling standards.

The Australian Securities and Investments Commission (ASIC) is
ASX’s listing authority and monitors ASX’s own compliance with
the listing rules.

Corporate governance continued

ASX’s Regulatory Assurance function is responsible for reviewing
ASX’s compliance with its conflict and information handling stand-
ards, and reports on these matters to the ASX Compliance board
and the Audit and Risk Committee.

Management

Role and responsibilities of the CEO
The Board delegates day-to-day management of ASX to the
Managing Director and CEO who has responsibility for the overall
operational and business management of ASX. The CEO is responsi-
ble for managing ASX’s reputation and profit performance in accord-
ance with the strategy, plans and policies approved by the Board.

Mr Dominic Stevens was appointed ASX’s Managing Director and
CEO in August 2016. Details of Mr Stevens' qualifications and expe-
rience are set out on page 5.

Senior management
ASX’s senior executives support and report to the CEO. Roles and
responsibilities of the executives are defined in specific position
descriptions.

In FY17, the following changes were made to ASX’s senior executive
management group and its reporting structure:

• ASX’s Technology and Operations functions were brought

together under a newly created Chief Operating Officer role.
Mr Timothy Hogben was promoted to this role

Code of Conduct

ASX’s Code of Conduct and Anti-Bribery and Corruption,
Whistleblower Protection and Fraud Control policies promote ethical
and responsible decision-making by all directors and employees of
ASX. The Anti-Bribery and Corruption Policy requires employees
to report all gifts above a specified threshold. The Audit and Risk
Committee receives periodic reports. Employees are required to act
with high standards of honesty, integrity, fairness and equity in all
aspects of their employment. There are formal escalation and griev-
ance procedures. All forms of facilitation payments are forbidden.

The Whistleblower Protection Policy supports employees who
report non-compliant or suspicious and unethical conduct by other
employees. This formalises ASX’s commitment to protect the confi-
dentiality and position of employees wishing to raise matters that
affect the integrity of ASX.

Staff attestations of compliance with and understanding of these
policies are obtained periodically.

Trading by ASX Group directors and employees
ASX’s Group Dealing Rules restrict dealing in securities by ASX
directors and employees. These were reviewed in FY17. Derivatives
and hedging arrangements for unvested ASX securities, or vested
ASX securities subject to holding locks, are prohibited.

Recognising and managing risk

• Mr Hamish Treleaven was appointed Chief Risk Officer following

the retirement of Mr Alan Bardwell.

Effective risk management is key to achieving and maintaining ASX’s
operational and strategic objectives.

The biographies of ASX’s senior executives are available on ASX’s
website. ASX’s Key Management Personnel are listed on page 21
of the Remuneration Report.

Senior management performance and remuneration
The Board assesses senior management performance on an annual
basis. Senior managers are assessed against Group and individual
performance targets. They are not present when their performance
and remuneration are discussed.

The overall performance of the ASX Group, the senior manager’s
function and the individual performance of the manager are consid-
ered in assessing performance.

The governance arrangements that underpin ASX’s risk management
framework are described in this section. Material business risks are
described in the Operating and Financial Review (page 35), which
also outlines ASX’s activities, performance, financial position and
main business strategies. ASX’s management of environmental and
social sustainability risks is discussed in the Environment, Social and
Governance section of this report on pages 13 to 16.

Role of the ASX Board
The ASX Board is responsible for reviewing and overseeing systems
of risk management, internal control and compliance, including
the process for identifying significant risks, and that appropriate
controls, monitoring and reporting mechanisms are in place.

Further details regarding senior manager and CEO performance
and remuneration are set out in the Remuneration Report that
starts on page 17.

The Board has established the Audit and Risk Committee to assist
it to discharge these responsibilities.

A performance evaluation took place in FY17 in accordance with
this process.

Diversity

ASX’s Diversity and Inclusion Policy describes how ASX promotes
diversity in the workforce. The diversity objectives adopted by
the Board, and performance in FY17, are set out on pages 14 to 15.

Role of the Audit and Risk Committee
The Audit and Risk Committee is responsible for reviewing and
overseeing the risk management processes, internal controls and
compliance systems within the ASX Group (other than those matters
carried out by the CS boards as described below). The committee
reports to the ASX Board.

The Audit and Risk Committee receives regular reports from the
Chief Risk Officer on enterprise risks; from the Chief Operating
Officer on operational, technology and cyber security risks; as well
as reports from Internal Audit, Regulatory Assurance and ASX’s
external auditor. It reviews ASX’s enterprise risk framework annually
with a focus in FY17 on ASX’s Cyber Security Plan and Strategy.

ASX Annual Report 2017 Corporate governance / 11

Corporate governance continued

The role of the Audit and Risk Committee in reviewing ASX's financial
reports and liaising with ASX's external auditor are described below
under the heading: Integrity of financial reporting.

Role of clearing and settlement boards
The CS boards review and provide oversight of the risk manage-
ment processes, internal controls and compliance systems for the
management of clearing and settlement risks including:

• counterparty credit risk

• treasury investment risk

• liquidity risk of ASX’s clearing houses

• settlement risks within ASX Settlement

• compliance with the RBA’s Financial Stability Standards.

Enterprise Risk Management Committee, Internal Audit and
Regulatory Assurance
The Enterprise Risk Management Committee is a management
committee chaired by the Chief Risk Officer. It has oversight of the
implementation and execution of ASX’s enterprise risk management
framework, approves risk policies and considers general risk matters
consistent with the ASX Board’s risk appetite.

ASX’s Internal Audit function reviews and reports on internal
control systems and procedures. It has full access to the Audit and
Risk Committee. The detailed role and responsibilities of Internal
Audit are set out in its charter, available online. Internal Audit’s
scope, function and budget are determined by the Audit and Risk
Committee each year. The Audit and Risk Committee also reviews
Management’s response to internal audit reviews.

The General Manager Internal Audit reports to the Audit and Risk
Committee, CS boards and CEO for functional audit purposes; and
to the Chief Risk Officer for other purposes. The Internal Audit
function is independent of the external auditor.

ASX’s Regulatory Assurance function maps the compliance frame-
work for key obligations, oversees ASX’s conflict handling arrange-
ments, and provides training to the business so that key Australian
and international obligations are understood and complied with. It
also undertakes compliance reviews and reporting to regulators. The
General Manager of Regulatory Assurance has a direct reporting
line to the chairs of the Audit and Risk Committee and CS boards
for key licence obligations and conflict handling arrangements.

An external assessment of ASX’s enterprise risk management frame-
work occurs periodically, with the last review undertaken in FY16.

Integrity of financial reporting

The Audit and Risk Committee assists the Board to review and
monitor the integrity of ASX’s consolidated financial reports and
statements. In accordance with its charter, the Audit and Risk
Committee reviews the financial reports and statements with
Management and the external auditor (including for compliance
with accounting standards, policies and other requirements).

When considering the half-year and full-year financial statements,
the ASX Board receives a statement from the CEO and the Chief
Financial Officer (CFO) consistent with the requirements of the
Corporations Act 2001. These statements are made after the CEO
and CFO receive attestations from senior executive Management in

/ ASX Annual Report 2017 Corporate governance

respect of their business lines. The Board also receives a statement
from the CEO and Chief Risk Officer that ASX’s risk management
and internal control systems are operating effectively for material
business risks.

ASX’s external auditor, PwC, attends each Audit and Risk Committee
meeting. The Audit and Risk Committee meets with PwC without
Management present at least once annually. The fees paid to PwC
for audit and non-audit services are set out on page 69. PwC’s
confirmation that there has been no contravention of the auditor
independence requirements of the Corporations Act 2001, and no
contraventions of any applicable code of professional conduct in
relation to its audit, is set out on page 39. ASX’s external auditor will
be present at ASX’s AGM to answer questions relevant to its audit.

Communicating with shareholders and market
disclosures

Continuous disclosure
ASX’s Listing Rule 3.1 Policy (available on ASX’s website) sets out
how ASX complies with its disclosure obligations. This policy was
reviewed in FY17 and determined to be fit for purpose.

All market sensitive disclosure, including any earnings or other
guidance, is first made available on the ASX Market Announcements
Platform.

Shareholder engagement
Details about ASX’s 2017 AGM are provided on page 81.

ASX’s Shareholder Communications Policy sets out ASX’s aim to
communicate with shareholders concisely, accurately and in plain
language.

ASX uses a number of channels and technologies, including webcast-
ing and social media, to communicate promptly, transparently and
widely. It enables shareholders to participate in shareholder meet-
ings, and deals with shareholder enquiries fairly and respectfully.

Payments to political parties

ASX actively engages with government and political decision-mak-
ers about its role, the investments it is making to build world-class
infrastructure, and the dynamic and globally competitive market
environment in which it operates.

ASX has a responsibility to Australia’s financial markets and its
shareholders, customers and staff to articulate the opportunities
and challenges facing its business, communicate its position on
relevant public policy issues, and contribute to well-informed deci-
sion-making by government.

During FY17, ASX paid $100,000 in membership fees to each of the
Liberal Party Australian Business Network and the Federal Labor
Business Forum. ASX’s membership of these business networks
provides an opportunity to engage with a wide cross-section of
policy and business decision-makers. No other payments to political
parties were made during FY17.

All payments to political parties are disclosed by ASX and must be
approved by the CEO and the General Counsel in line with the policy
and limits set by the Board.

Environment, social and governance

The Board monitors environmental, social and governance (ESG)
risks through its enterprise risk management framework with a
focus on the sustainability of ASX’s business.

ASX’s ESG strategy encompasses initiatives designed to address
these risks and to improve ASX’s impact on society through:

• the role that it plays in financial markets

• how it conducts its business.

This section provides an overview of ASX’s initiatives.

Economic risks are addressed in ASX’s Operating and Financial
Review on page 35.

ASX’s role in financial markets

Investor education
Promoting informed investing supports ASX’s business. ASX provides
access to free tools and resources to explain the potential rewards
and risks of investing. These include online courses, YouTube pres-
entations, face-to-face events around Australia and a monthly
e-newsletter that has over 270,000 subscribers.

The ASX Sharemarket Game provides an opportunity for the general
public and secondary school students to become familiar with the
mechanics of share trading. The game is linked to the live market,
which connects students to real-world events. There were more
than 65,000 student entries from 900 schools and 49,000 entries
from members of the public playing the Game last year.

ASX Corporate Governance Council
The ASX Corporate Governance Council publishes a principles-based
framework for corporate governance practices – the Corporate
Governance Principles and Recommendations – that serves as a
relevant and practical guide for listed entities, investors and the
wider Australian community.

The Council brings together business, investment and shareholder
groups. As the convener, ASX nominates the chair, contributes one
member of the Council and provides executive support.

ASX's listing rules require that listed entities disclose the extent to
which they have followed the recommendations set by the Council
during the relevant reporting period. Where companies have not
followed a recommendation, they must provide an explanation (‘if
not, why not’ reporting). These reporting requirements bring trans-
parency to the corporate governance practices of listed companies,
which enables investors to make informed investment decisions.

ESG guidance to issuers and participation in external
assessments
The Council has contributed to an improvement in public reporting
and awareness of ESG matters by listed entities.

The third edition of the Principles and Recommendations released in
March 2014 requires listed entities to include details in their Annual
Report of how they manage their material economic, environmental,
social sustainability and governance risks.

ASX participates in the following assessments of its ESG practices:

• Carbon Disclosure Project – emissions and waste

• FTSE4Good Index Series – identifies companies that meet

social and environmental criteria

• World Federation of Exchanges annual survey – gauges an

exchange’s role in sustainability.

Sustainable Stock Exchanges Initiative
In 2017, ASX became a partner exchange in the United Nations'
Sustainable Stock Exchange (SSE) Initiative.

The SSE is a peer-to-peer learning platform for exploring how
exchanges, in collaboration with investors, regulators and compa-
nies, can enhance corporate transparency on ESG issues and encour-
age sustainable investment.

ASX partnered with the SSE to ‘ring the bell for gender equality’ on
International Women’s Day in 2017. The event brought attention to
the importance of women’s economic empowerment to business
development and growth. Information about ASX’s diversity and
inclusion initiatives are set out on the following pages.

Cyber security health check
In FY17, ASX collaborated with government, ASIC and audit firms,
inviting the largest 100 ASX-listed companies to participate in a
cyber health check – a survey to benchmark the levels of cyber
security awareness, capability and preparedness within Australian
business.

The report provides a framework for all Australian businesses to
better evaluate their effectiveness in addressing cyber risk and
identify opportunities to improve their resilience. The sharing of
best practice and increased engagement by directors are impor-
tant steps in building the cyber resilience of Australian business,
which is of great importance to the investors who hold shares in
Australian companies.

How ASX conducts its business

ASX people
ASX aims to build and retain a highly motivated team of profes-
sionals with the best available skills and experience.

The Remuneration Committee oversees and receives reports on
ASX's people policies and programs. In addition, the Executive
Committee reviews talent and leadership programs, performance
management and reward processes, succession planning, diversity,
and staff alignment and engagement results.

Culture
Management and the Board review the values and behaviours
that reflect ASX’s brand and culture. An annual survey measures
staff alignment, engagement and commitment to ASX values and
behaviours. Results are reviewed by the Remuneration Committee.
ASX’s Internal Audit and Regulatory Assurance functions provide
periodic feedback on risk and compliance consciousness.

ASX Annual Report 2017 Environment, social and governance /

Environment, social and governance continued

Ethics and integrity
ASX’s Code of Conduct and Anti-Bribery and Corruption, Fraud
Control, and Whistleblower Protection policies promote ethical
and responsible decision-making by ASX directors and employees.
Employees certify they understand and comply with these policies.
Periodic training is provided on these policies, and on equal employ-
ment opportunity, diversity and dealing rules.

Remuneration
ASX’s market positioning for fixed remuneration is the median to
upper quartile. Employees participate in a short-term incentive (STI)
plan, subject to performance. During the year, an offer to all ASX
employees to acquire ASX shares under a $1,000 General Employee
Share Plan was accepted by 57% of ASX staff. ASX’s Remuneration
Report on page 17 describes ASX’s approach to senior executive
remuneration.

Training and retention
Learning and development programs are available at all levels of
the organisation, and are reviewed for alignment with ASX goals.

ASX partners with the Macquarie Graduate School of Management
to support emerging female leaders in their MBA studies.

Voluntary turnover was 12% in FY17.

Workplace health and safety
ASX is committed to the health and safety of all employees, visi-
tors and contractors. Staff are encouraged to identify and address
potential causes of workplace risk, injury and illness.

The Audit and Risk Committee receives quarterly updates on ASX’s
compliance with workplace health and safety (WHS) laws. WHS
performance is audited periodically by an independent third party.

ASX’s FY17 lost-time injury frequency rate (the number of lost-time
injuries per 1 million hours worked) was less than 0.1. This is in line
with FY16.

Prevention of harassment and discrimination
ASX works to prevent discrimination and harassment in the work-
place. Mandatory online training is completed by all employees on
commencement of employment.

ASX has processes in place to monitor and address discrimination,
and staff must complete online training periodically.

ASX Wellbeing
ASX's Wellbeing program supports staff to balance work, personal
and family life. It subsidises activities such as yoga, pilates, medita-
tion, lunchtime sport and a walking club. ASX's Social Committee
coordinates company-funded events throughout the year.

/ ASX Annual Report 2017 Environment, social and governance

Diversity and inclusion

ASX supports a diverse and inclusive work environment where
employees have equal access to career opportunities, training and
benefits. Employees are treated with fairness and respect, and are
not judged by gender, age, ethnicity, race, cultural background,
religion, sexual orientation, disability or caring responsibilities.

ASX promotes gender equality as a priority and supports equal
participation of men and women in the workforce.

ASX is recognised as an Employer of Choice for Gender Equality
by the Federal Government’s Workplace Gender Equality Agency
(WGEA) and continues as member of the Male Champions of Change,
a corporate and institutional collaboration committed to advancing
women in leadership positions.

ASX is focused on the following five key areas:

Gender equality targets
ASX has a target of 40% female representation for all senior manage-
ment levels. Progress was made in FY17, with the target exceeded
at the Management Executive and Manager/Team Leader levels,
as well as across the entire organisation.

ASX requires a gender-balanced shortlist when recruiting all roles.

Representation of women in ASX as at 30 June 2017:

ASX level
Board of directors

Group Executives

Executive Committee
(excludes CEO)

Management Executive

Managers/Team Leaders

Professional/technical

Administrative

Entire organisation

FY16
%
22

FY17
%
30

Target
%
33.3

50+

40+

Group Executives: direct reports to the CEO
Executive Committee: comprises all Group Executives and Executive General
Managers
Management Executive: executives two layers below the CEO
Managers/Team Leaders: executives three layers below the CEO
Entire organisation: includes casual staff and excludes non-executive direc-
tors and independent contractors

Note: all data is non-cumulative and is calculated on the number of employ-
ees in each level.

Accountability for gender diversity
Gender equity targets form part of an executive's balanced score-
card. Achievement against these targets within the scorecard is
considered when determining STI.

Pay equality
A pay equality review in FY17 identified that ASX has narrowed
the pay gap over the past two years. ASX is committed to closing
this gap and has increased the frequency of reviews to every year.

ASX monitors and analyses annual remuneration and performance
recommendations by gender, level, division, and ‘same’ role through-
out the year, during recruitment and prior to finalising the annual
remuneration review process.

Environment, social and governance continued

Building leadership capability
ASX participates in the Chief Executive Women Leaders Development
Program, which provides individual coaching for participants.

An employee-led initiative has increased the number of networking
events, created informal learning and development opportunities,
and helped employees on parental leave stay connected to ASX.

ASX is piloting a new approach to leadership development focused
on holistic personal leadership and leadership skills, including
collaboration, agility, performance and innovation.

In FY17, ASX required employees and managers to hold monthly
'check-ins' focused on development, feedback and employee
wellbeing.

Supporting working families
ASX supports a flexible working environment, enabling staff
to change their work hours and place of work, set up job share
arrangements, take career breaks and parental leave, or purchase
additional leave.

In FY17, 63% of employees identified as working in a flexible capacity.
A staff survey found that employees who work in a flexible capacity
are, on average, more highly engaged than those who do not.

ASX’s parental leave policy provides 16 weeks’ paid leave for
primary carers and four weeks’ paid leave for secondary carers.
Superannuation contributions foregone during unpaid parental
leave are paid as a one-time contribution on return to work up to
a maximum of 36 weeks. Graduated return to work options are
available to support staff transition back to the workplace.

These initiatives build on those introduced in FY16 including:

• ASX Environment Committee newsletter

• paperless supplier invoice process

• simplified New Investor Pack

• battery, phone and coffee pod recycling programs

• use of carbon neutral paper.

FY17 achievement against initiatives/targets
In FY17, Management set the following targets for controllable
consumption of paper (not including CHESS statements and noti-
fications) and electricity (excluding ASX’s data centre hosting):

• 5% reduction in controllable paper usage per headcount

• 2% reduction in controllable electricity consumption per $1,000

of revenue generated.

ASX’s achievement against these targets is set out below:

Target
reduction
for FY17

Actual
reduction
from prior
year

FY16

FY17

0.0106

0.0102

0.0138

0.0123

11%

FY17 targets
Electricity GHG1
emission (excluding
ASX's data centre
hosting) per $1,000
of revenue generated
(in t CO2-e2)
Paper usage (exclud-
ing CHESS statements
and notifications) by
headcount (tonnes)

ASX is accredited as a Breastfeeding Friendly Workplace by the
Australian Breastfeeding Association.

1 Greenhouse gas (GHG) emissions.
2 Tonnes of carbon dioxide equivalent.

Environment

ASX is a service-based organisation that does not extract physical
or natural resources and is not involved in the manufacture or
transport of products. ASX’s environmental footprint is small and
arises from the energy used by its three offices and two data centres,
and from consumables, primarily paper. ASX’s environmental risks
are not significant.

Nevertheless, environmental risks are monitored, assessed and
managed as part of ASX’s risk management framework. ASX’s
approach includes: measuring the impact of its activities, minimising
consumption of materials, recycling and re-using consumables, and
supporting awareness of environmental issues.

FY17 initiatives
During the period, ASX:

• introduced a paper-free employee on-boarding system to

reduce paper consumption

• finalised the roll out of mobility devices to all staff, upgraded
communication equipment to enable virtual meetings and
reduced business travel between ASX offices

• upgraded its intranet and file sharing technology to enhance
the ability to store and present documents electronically.

Electricity usage
ASX has a number of initiatives in place to reduce its emissions. ASX’s
electricity consumption decreased slightly in FY17, notwithstanding
increased headcount and activity levels during the period.

More than half of ASX’s energy usage is in the Australian Liquidity
Centre (ALC), ASX’s primary data centre. The ALC supports the
equipment and systems of customers who co-locate with ASX
instead of in their own or other facilities. Growth in this business (and
its energy consumption) reflects the ALC’s position as the premier
financial markets ecosystem in Australia. The number of IT cabinets
hosted in the ALC has grown from 117 to 285 in the last four years.

ASX has implemented measures to ensure that a disruption to the
supply of electricity to its sites (including to its data centres) will not
result in a service disruption to its customers. The infrastructure
that supports ASX’s data centres incorporates uninterruptible
power supply systems, which provide ongoing electricity in the
event of a loss of power from the grid. ASX’s business continuity
management plans outline how ASX will maintain operations in such
circumstances. These plans are reviewed periodically.

In FY17, ASX purchased diesel for the back-up power systems at the
ALC. This was the first top-up since FY15 and is the primary reason
for the increase in diesel consumption shown in the following table.

ASX Annual Report 2017 Environment, social and governance / 15

Environment, social and governance continued

Environmental impact
Greenhouse gas (GHG) emissions
Scope 1 – diesel and gas

Scope 2 – electricity

GHG emissions by activity
Scope 1 – diesel and gas combustion

Scope 2 – electricity (data centre hosting)
– electricity (remainder ASX’s business)

Scope 3 – travel (business travel and commuting)
– paper usage (office)2
– paper usage (CHESS statements and notifications)2

Paper usage
Office use

CHESS statements and notifications

Unit
t CO2-e1
t CO2-e

Unit
t CO2-e

t CO2-e

t CO2-e
t CO2-e
t CO2-e

Unit
tonnes

tonnes

2014
100

12,250

2014
100

7,963
4,288

956
23
129

2014
11.58

2015
29

13,011

2015
29

8,457
4,554

986
16
146

2015
8.01

2016
11

2017
48

14,435

14,262

2016
14

10,105
4,332

1,021
02
02

2016
7.35

2017
48

9,983
4,279

613
0
0

2017
6.82

1 Tonnes of carbon dioxide equivalent.
2 GHG emissions reported inclusive of carbon offset. ASX commenced using 100% carbon neutral paper in 2015.

ASX Thomson Reuters Charity Foundation
The ASX Thomson Reuters Charity Foundation supports Australian
children’s and medical research charities by organising fundraising
events for financial markets participants. Over $1.3 million was
raised and distributed to 31 charities in FY17. The Foundation’s eight
person board includes three ASX representatives.

ASX fulfils the company secretariat and finance functions for the
Foundation, and ASX employees volunteer to assist with fund
raising activities.

ShareGift Australia
ASX has supported ShareGift Australia since 2007 and promotes the
charity on CHESS statements sent to investors. ShareGift Australia
allows shareholders to sell shares free of brokerage costs and
donate the proceeds to charity. ASX reimburses all ASX exchange
fees on these transactions.

ASX includes a ShareGift donation form each year with its year-end
dividend advice.

ShareGift Australia has donated over $1.4 million to more than
450 charities.

Paper usage
ASX’s paper usage by headcount (excluding CHESS statements and
notifications) decreased over FY17.

Management continues to reduce paper usage in ASX’s business
and the financial markets overall. For example, ASX's simplified New
Investor Pack saved more than 47,500 pieces of paper in FY17. ASX
encourages its shareholders to receive electronic communications
instead of hard copy communications via post.

Suppliers
Material suppliers must comply with a Supplier Code of Conduct,
which includes minimum requirements across key ESG areas.

ESG considerations are included in all material procurement tenders.

ASX in the community

ASX assists its employees to support worthwhile causes and partic-
ipate in community programs outside the workplace. This includes
providing paid volunteering leave. ASX’s community programs
allow employees to support causes and charities of their choice.
ASX matches employee donations to these charity partners, with
$103,000 donated to 48 charities in FY17.

Anzac Centenary Public Fund
ASX is contributing a total of $1 million over a number of years to
the Anzac Centenary Public Fund. The Fund, established by the
Australian Government, receives donations to commemorate the
centenary of Australia’s involvement in the First World War and a
Century of Service. Projects honour and improve understanding
of the service and sacrifice of Australia’s servicemen and women,
past and present, in defending Australia’s values and freedoms.

/ ASX Annual Report 2017 Environment, social and governance

Remuneration report

This report outlines ASX’s remuneration framework and the
outcomes for the year ended 30 June 2017 (FY17) for the ASX Limited
Board and the Key Management Personnel (KMP) responsible for
planning, directing, and controlling the activities of the ASX Group.

Executive Committee
expansion

Key Management
Personnel changes

In August 2016, Mr Dominic Stevens was
appointed Managing Director and CEO.
The Executive Committee was expanded to
include all business unit heads.

The expansion of the Executive Committee
provided an opportunity to review disclosed KMP.

During FY17, the role of Chief Operating Officer
was created to manage both the technology and
operations functions. Mr Timothy Hogben was
promoted to this position effective 2 January 2017.

Mr Tim Thurman, Chief Information Officer,
ceased employment with ASX during FY17.

Mr Alan Bardwell, Chief Risk Officer, ceased
employment with ASX during FY17.

Mr Hamish Treleaven was appointed Chief Risk
Officer on 1 March 2017.

The Board reviewed the fixed remuneration of
each KMP, with fixed remuneration adjustments
ranging between 0% and 33.3%.

Fixed remuneration
outcomes

Following his promotion, Mr Hogben was
awarded a remuneration increase of 34.9%
effective 2 January 2017 to reflect the significant
additional scope and scale of his new role.

Short-term incentive
(STI) outcomes

Long-term incentive
(LTI) outcome

Fixed remuneration for KMP in FY18 will remain
unchanged.

STI outcomes reflect company performance.
The Group met most of its objectives for FY17.
KMP STI outcomes ranged from 90% to 108%
of target STI.

The 70% earnings per share (EPS) portion of
the FY15 LTI award was not met. The 30% total
shareholder return (TSR) portion of the FY15
LTI award will be determined at the September
2017 vesting date.

Remuneration philosophy

ASX’s remuneration rewards behaviours and results that contribute
toward the delivery of the ASX strategy. The framework is based
on the following key principles:

• link rewards to the achievement of the strategy and the crea-

tion of shareholder value

• apply rigorous performance measures to ‘at risk’ remuneration

• assess and reward performance on both financial and

non-financial measures

• provide competitive remuneration that is designed to attract,

motivate and retain talent and promote diversity

• promote sound and effective risk management and market

integrity.

Role of Remuneration Committee

The Remuneration Committee oversees ASX’s executive remuner-
ation framework and monitors remuneration outcomes. In doing
so it takes account of the interests of shareholders, and ASX’s
commitment to maintaining sound and effective risk management,
and the integrity of its markets.

The Board approves and reviews on an annual basis the remuner-
ation of ASX’s KMP on the recommendation of the Remuneration
Committee.

Advice to Remuneration Committee

The Remuneration Committee operates independently of ASX
Management and may engage remuneration advisors directly.
During FY17, the Remuneration Committee paid advisors approxi-
mately $7,000 to advise on current market trends.

Input is received from a number of subsidiary boards and commit-
tees regarding the performance and remuneration of certain KMP:

• ASX’s clearing and settlement boards provide feedback on the
performance of the Chief Risk Officer and the Chief Operating
Officer

• The Audit and Risk Committee provides feedback on the perfor-

mance of the Chief Financial Officer.

ASX Group remuneration

The remuneration arrangements for all staff are made up of a
fixed remuneration component and a variable component. The
variable component for all staff is ‘at risk’ subject to performance,
and delivered through the STI plan and an LTI plan for the CEO and
Deputy CEO. For a small group of sales staff, variable remuneration
is delivered through commission-based payments.

The relative weighting of fixed and variable components (remuner-
ation mix) will vary with role level, complexity and market practice.
The remuneration mix is expressed as a percentage of the total
reward which equates to 100%.

STI deferral into equity is in place for all KMP. The deferral arrange-
ments set out in this report apply to the CEO, Group Executives,
Executive General Managers and General Managers. They represent
approximately 6.3% of ASX headcount.

The FY17 remuneration mix for KMP for on-target performance was:

Fixed

Variable (at risk)

CEO and Deputy CEO

Other KMP

40%

60-75%

STI*
40%

25-40%

LTI**
20%

* The remuneration mix is for on-target performance (100%). The award of STI is
at the discretion of ASX and may be allocated at 0-150% of target.

** LTI value based on share price at time of grant.

ASX Annual Report 2017 Remuneration report / 17

Remuneration report continued

Fixed remuneration

Fixed remuneration comprises cash salary, superannuation and
other salary sacrificed benefits.

Fixed remuneration is reviewed on an annual basis against compa-
rable market data. ASX market positioning is the median to upper
quartile, depending on individual performance. Increases are
not automatic and are subject to a minimum level of individual
performance.

Variable remuneration

The STI plan provides variable remuneration to drive the achieve-
ment of ASX’s strategy and performance during the year. All employ-
ees are eligible to participate.

Employees set individual goals and targets across six scorecard
areas: strategic priorities, customers and growth, people and
culture, operational excellence, regulatory focus, and financial
results. Employees also have goals that promote sound and effective
risk management and market integrity. Individual goals and targets
support ASX’s strategic goals. Managers have regular conversations
with team members about their development and progress against
individual goals and targets.

STI awards are based on the performance of the ASX Group against
the objectives set by the Board, and individual performance against
the goals and targets in the individual scorecards, as assessed by
each individual’s manager and senior executive.

Calculation of STI award
KMP STI is calculated using the formula in the diagram below.

Target STI
The sum of individual target STI amounts determines the target
Group pool for Executives.

Group incentive pool
The Board makes an assessment of the Group’s performance split
evenly between financial objectives and non-financial and strategic
objectives. The assessment for FY17 is set out on page 19 of this
report.

Based on that assessment, the Board approves a Group incentive
pool percentage that is applied to the target Group pool. For example,
if the target STI pool for executives is $10 million and the Board
determines that the Group’s performance was below target and
awards 80% of the pool, the Group STI pool available for distribution
to executives would be $8 million.

Individual performance
Individual performance determines the amount of STI awarded. Up
to 150% of target STI can be awarded for exceptional performance.
The minimum award is nil.

Award of STI is subject to satisfactory performance against the
ASX leadership behaviours.

The performance of each KMP is assessed by the Remuneration
Committee and the Board.

STI deferral and vesting
A percentage of STI awards for senior executives is automatically
deferred into equity:

STI award
Cash payment upfront

KMP and
Executive General
Managers
(% of award)
40%

General Managers
(% of award)
50%

Deferred in equity for two years

Deferred in equity for four years

30%

50%

N/A

Target STI in
$

Target reward
model

On-target STI as
% of total reward

Group
incentive
pool %

Determines the
available pool

Financial and
non-ﬁnancial
performance

Individual
performance
rating %

Differentiated
based on 1-5
rating scale

Behaviours as ‘gate’

Individual goals
linked to
ASX strategy

STI award in $
equity deferral

Recommendation

Incentives are at
Board discretion

60% award
deferred into
equity for KMP

/ ASX Annual Report 2017 Remuneration report

Remuneration report continued

Board assessment of ASX’s FY17 performance against objectives
In assessing STI financial performance, the Board takes into consideration the market conditions in the business directly exposed to market
activity levels. This means that incentives may be awarded even when market conditions lead to a fall in revenue or earnings, provided
other objectives are met.

In FY17, the financial and non-financial objectives were largely on target, however the group incentive pool applied to KMP was 90% of
target. This took into consideration the below target system availability following the trading platform outage in September 2016.

Financial objectives – 50%

Revenue growth

Net profit after tax (NPAT)

Earnings per share (EPS)

Performance
Revenue increased 2.4%

NPAT up 1.9%

EPS up 1.9%

Dividends per share (DPS)

Full-year dividend per share 201.8 cents, fully franked, up 1.9%. Payout ratio 90%

Non-financial objectives – 50%

Customers and growth
Build strong partnerships with clients
and a customer-focused culture

Performance
Continued engagement with customers to deliver tangible benefits
• significant growth in OTC clearing value, with all eight foundation banks now utilising

the service. OTC Service enhancements implemented during the year

• strong growth in Centre Point, up 36%. ASX’s equities trading market share was

87.5%, marginally lower than the prior year
• success of weekly exchange-traded options
• continued growth in ASX Collateral service
• customer engagement continues to improve with structure in place since FY16

Board
assessment

At target

Board
assessment

At target

Technical and operational performance
Deliver world-class trading and
post-trade infrastructure to
Australia’s financial markets

Good progress on technology initiatives; operational performance benchmarks not met
• critical system availability did not meet the 99.95% and 99.80% targets. One ‘severity 1’
issue (equities trading platform outage in September 2016) and one 'severity 2' issue

• successful implementation of futures trading platform in March 2017
• progress on development of distributed ledger technology to potentially replace

CHESS

System availability
below target

Technical service
at target

Regulatory compliance and risk
management
Maintain ASX’s position as one of the
highest quality and best regulated
exchange groups

Continued to meet the highest standards
• positive regulatory assessments with no major issues raised
• Financial Stability Standards compliance in place and new recovery rules

implemented

• successful transition of investment portfolio to meet new regulatory requirements
• updated listing rules effective from December 2016
• upgraded risk management function

People and culture
Build a strong performance culture
with a highly engaged team

Continued to make positive progress on people and culture
• alignment and engagement is measured through the ASX staff survey
• new performance management system that enables monthly development conversa-

tions has been implemented

• progress against diversity targets of 40%. Targets achieved at overall organisational,

Management Executive and Manager/Team Leader levels

• workplace health and safety – lost-time injury frequency rate less than 0.1

Stakeholder engagement
Be recognised as a positive contributor
to Australia’s economic future

Significant stakeholder consultation program underway
• engagement with customers and regulators to further refine our operational

processes and market communication protocols

• significant consultation undertaken on equity post-trade service with market

participants and regulators

• increased engagement through the cash equities clearing and settlement Code

of Practice and expanded Business Committee engagement

At target

ASX Annual Report 2017 Remuneration report / 19

Remuneration report continued

Long-term incentive overview

The purpose of the LTI plan is to recognise performance and behav-
iours that deliver substantial long-term shareholder value.

Only the CEO and the Deputy CEO participate in ASX’s LTI plan. ASX
will submit Mr Stevens' FY18 LTI grant for shareholder approval at
the 2017 AGM.

The LTI is a grant of performance rights over ASX ordinary shares,
which will vest if ASX achieves performance hurdles determined
by the Board.

ASX’s LTI has a four-year performance period. The number of perfor-
mance rights allocated is based on the volume weighted average
price of ASX shares (face value) on the 10 business days preceding
the grant date. No dividends are paid on the performance rights.
There is no retesting. Half of the performance rights have an EPS
and half have a TSR performance condition.

EPS LTI component
EPS is calculated by dividing the underlying profit after tax for the
relevant reporting period (profit after tax adjusted for the after-tax
effect of any significant items) by the weighted average number of
ordinary shares of ASX. Significant items are revenues and expenses
associated with specific events considered appropriate by the
directors to be excluded in order to arrive at underlying earnings.
Exclusion of these items would be clearly identified and explained
if such action changed any vesting outcome.

Performance
< 5.1% (pa)

5.1%

5.1% - 10.0%

>10%

Compound annual growth in EPS (4 years)

% of equity to vest
0%

50%

50% to 100% straight line pro-rata vesting

100%

EPS performance is measured over a four-year period using the
most recent financial year end prior to the granting of the award
as the base year, and the final financial year in the performance
period as the end year.

TSR LTI component
TSR is calculated as the movement in share price and dividends
received, assuming re-investment of dividends. TSR is measured
against a peer group determined by the Board at the time of the
offer based on the ASX 100, excluding property trusts.

Performance
< 51st percentile

51st percentile

Ranking of TSR (4 years)

% of equity to vest
0%

25%

51st – 76th percentile

25% to 100% straight line pro-rata vesting

>76th percentile

100%

The peer group may change as a result of specific events such as
mergers and acquisitions, delistings and financial failures. There
are guidelines for adjusting the peer group following such events.

Past LTI grants
Shares relating to grants of performance rights that have vested
are allocated from a surplus pool of unvested LTI offers within
a special purpose trust and released as shares to the employee.
Shares allocated under the LTI plans rank equally with other shares
on issue at the time those shares are allocated.

Grant year

Grant date

Participation*

Performance
measure

EPS vesting
commences at

TSR vesting
commences at

Vesting period

Vesting date

Dividends paid

Retesting

FY17
28 September
2016

FY16
30 September
2015

FY15
23 September
2014

50% EPS
50% TSR

5.1%
compound
growth

50% EPS
50% TSR

5.1%
compound
growth

70% EPS
30% TSR

8.1%
compound
growth

51st percentile

4 years

3 years

29 September
2020

1 October
2019

24 September
2017

*The grants for FY16 and FY15 exclude former CEO Elmer Funke Kupper who
resigned 21 March 2016.

Accounting treatment of LTI
The fair value of the performance rights for EPS awards is calculated
using the share price at market close on the grant date, less the pres-
ent value of the expected dividends over the performance period.

The fair value of performance rights for the TSR awards is calcu-
lated at grant date by an independent valuer using a Black-Scholes
option valuation model and Monte Carlo simulation. Details of the
awards, including inputs to the valuation model are summarised
in the following table:

Grant year

FY17

FY16

FY15

Share price at grant date

$47.78

$37.88

$36.45

Volatility (pa)

17%

16%

14%

Discount rate (risk free rate) (pa)

1.70%

1.94%

2.87%

Dividend yield (pa)

4.60%

4.75%

5.00%

Fair value of performance rights
(EPS awards)

Fair value of performance rights
(TSR awards)

$39.75

$31.32

$31.37

$19.62

$15.36

$17.94

Weighted average AASB 2 share-based
payment fair value

$29.68

$23.34

$27.34

/ ASX Annual Report 2017 Remuneration report

Remuneration report continued

Executive service agreements

Each KMP has an ongoing service contract. The contracts do not provide for any termination payments, other than payment in lieu of
notice and any statutory entitlements. The key terms are:

Name
D J Stevens

R Aziz

A J Harkness

P D Hiom

T J Hogben

H J Treleaven

Former
A J Bardwell2

Position held
Managing Director and CEO

Chief Financial Officer

Group General Counsel

Deputy CEO

Chief Operating Officer

Chief Risk Officer

Minimum notice periods (months)

Contract effective date
1 August 2016

Executive
6

19 July 2010

10 September 2007

1 July 2015

1 April 2010

1 March 2017

19 July 2010

ASX
12

Poor
performance
3
11
6
31
11
31

1 The notice period for termination for poor performance requires an initial written notice of one month.
2 A J Bardwell ceased employment on 10 February 2017.

Treatment of STI and LTI on departure

Clawback Policy and Board discretion

All deferred or unearned STI is forfeited in the event of resignation
(unless approved by ASX) or dismissal due to misconduct or poor
performance. Treatment of STI on departure for other reasons is
at the discretion of the Board (for the CEO) or CEO.

Performance rights (LTI) will lapse immediately in the event of
resignation (unless approved by ASX) or dismissal due to misconduct
or poor performance, unless the Board determines in its discretion
that the participant ceased employment for a qualifying reason.
This includes pursuit of other company-approved initiatives, death,
serious illness or accident. Where LTI does not lapse immediately,
the Board may determine in its discretion the proportion of shares
that are forfeited.

The CEO will forfeit any STI or LTI if ASX determines that such action
is necessary to protect the financial soundness of ASX or where
adverse outcomes have arisen that reduce the original assessment
of the performance generating the provision of the benefit.

The Clawback Policy permits the Board to clawback some or all of
an executive’s proposed performance-based remuneration if the
Board considers that such remuneration would be an ‘inappropri-
ate benefit’. This includes any STI or LTI award and other perfor-
mance-based component of remuneration that has not yet been
paid or vested without restrictions to an executive. The Board has
absolute discretion to determine what constitutes an ‘inappropriate
benefit’ and how to apply the clawback, subject to compliance with
the law and the conditions set out in the policy. This discretion can
be applied at any time.

The Board may adjust LTI outcomes by up to 20% in its discretion.
The Board may also adjust LTI outcomes if outcomes have been
materially impacted by changes to dividend policy, capital structure,
gearing or corporate structure.

This discretion has not been applied in the current year or prior
years. The Board will exercise such discretion in a manner that is
consistent with supporting sound and effective risk management,
protecting ASX’s long-term stability and aligned with creation of
long-term shareholder value. If this discretion was applied in any
year, it would be clearly disclosed and explained.

ASX Annual Report 2017 Remuneration report / 21

Remuneration report continued

Historical company performance

Non-executive director remuneration

ASX’s financial performance over the five-year period ending FY17
is shown in the graphs below.

The Remuneration Committee reviews and recommends to the
Board the remuneration for non-executive directors.

Net proﬁt after tax ($million)

2
3
8
3

8
7
9
3

2
3
0
4

2
8
4
3

2
6
2
4

1
.
4
3
4

Fees are broadly aligned to the top quartile of the marketplace
so that:

• ASX non-executive directors are remunerated fairly for their

services, recognising the workload, and level of skill and experi-
ence required for the role

• ASX can attract and retain talented non-executive directors

FY13

FY14

FY15

FY16

FY17

Statutory proﬁt

Underlying proﬁt

Earnings per share (EPS) (cents)

5
5
9
1

5
8
9
1

7
5
0
2

4
8
0
2

4
0
2
2

5
4
2
2

FY13

FY14

FY15

FY16

FY17

Reported EPS

Underlying EPS

Dividends (cents per share)

82.3

89.9

95.1

99.0

99.8

87.9

88.2

92.3

99.1

102.0

FY13

FY14

FY15

FY16

FY17

Interim

Final

• fees are in line with market practice.

Remuneration structure
Non-executive director remuneration includes:

• Board fee

• committee and subsidiary board fees

• superannuation.

Board, committee and subsidiary board fees have regard to the
responsibilities of each position. Fees are determined by the
Board within the aggregate amount approved by shareholders.
Non-executive directors have no entitlement to any perfor-
mance-based remuneration or participation in any share-based
incentive schemes. ASX does not have a non-executive director
retirement scheme.

Director fees
The maximum aggregate amount that may be paid to all ASX non-ex-
ecutive directors in their capacity as members of the ASX Board
and its committees, and as directors of subsidiary boards, is $2.8
million per annum. This was approved by shareholders at the 2012
AGM. The amount paid in FY17 was $2.4 million.

ASX reviewed its non-executive director fee structure in August 2017
and made changes that will take effect in October 2017. These were
determined having regard to changed responsibilities of directors
across ASX's governance forums.

At the 2017 AGM, ASX will seek shareholder approval to increase
the maximum aggregate amount payable to directors from $2.8
million to $3.0 million. The proposed new maximum reflects the new
fee structure and takes into account changes in the number and
responsibilities of ASX's non-executive directors, while maintaining
a fee buffer to provide flexibility. Additional information on this
item of business at the AGM is included in the Notice of Meeting.

ASX share price ($ at end of ﬁnancial year)

The Board reviews its fees regularly in line with ASX’s objectives
for non-executive remuneration.

33.07

35.64

39.90

53.61

45.76

FY13

FY14

FY15

FY16

FY17

/ ASX Annual Report 2017 Remuneration report

Remuneration report continued

Statutory remuneration of Group Executive KMP

The remuneration table below has been prepared in accordance with accounting standards as required by the Corporations Act 2001.
The accounting standards only require the disclosure of the expense or cost to the company in the financial years presented, which may
result in only a portion of cash remuneration being disclosed where payments are deferred to future financial years. In addition, the
accounting standards require share-based payments expense to be calculated using the grant date fair value of the shares rather than
current market prices.

Short-term

Long-term

Share-based payments4

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o
T

-
e
c
n
a
m
r
o
f
r
e
P

5
d
e
t
a
e
r

17,950 116,248

- 2,605,234 29.8%

r
a
e
Y

y
r
a
a
S

y
r
a
t
e
n
o
m

-
n
o
N

I
T
S

2017 1,796,126

658,849

16,061

1
r
e
h
t
O

-
-

-
250,000

2017
2016

580,384
430,692

830,384
680,692

961,049
962,205

565,748
455,692

144,000
120,000

234,000
206,000

-
-

55,000
105,000

85,000
160,000

360,000
400,000

19,335
18,487

-
250,000

112,500
200,000

169,344
140,000

-
-

58,750
117,500

9,675
7,059

13,842
11,347

16,342
15,894

9,446
7,596

2017

256,339

35,337

- 200,000

19,616
19,308

11,058

19,616
19,308

-
-

67,500
-

115,875
-

19,616
19,308

(157,768)
110,577

225,000
-

-
-

876,175
682,059

30.4%
33.0%

1,298,717
1,327,347

33.5%
27.6%

1,556,074
1,976,471

34.7%
36.0%

-
-

78,750
-

938
-

902,592
740,096

34.0%
34.8%

502,734

7.0%

112,802
-

-
927

1,285,116
773,950

11.8%
19.2%

2017
2016

373,182
604,765

-
75,200

2016 1,253,097

525,000

-
-

865,346 1,500,000

625,000
-

38,750
73,750

118,017
-

17,365
19,308

2016

292,616

70,000

6,838

150,000

2016

680,692

150,800

2016

558,981

160,000

21,711

142,500

163,750

14,722 (614,713)

18,988

19,308

- 3,543,452 39.8%

538,442 13.0%

993,300 29.5%

923,750 35.0%

Current
D J Stevens
Managing Director and CEO6
(commenced 1 August 2016)

R Aziz
Chief Financial Officer

A J Harkness
Group General Counsel

P D Hiom
Deputy CEO

T J Hogben
Chief Operating Officer7

H J Treleaven
Chief Risk Officer
(commenced 1 March 2017)

Former
A J Bardwell
Chief Risk Officer
(ceased 10 February 2017)

E Funke Kupper
Managing Director and CEO
(ceased 21 March 2016)
L A Green8
Group Executive
Human Resources
(commenced 3 August 2015)
K A Lewis8
Chief Compliance Officer
T Thurman8
Chief Information Officer
(ceased in 24 March 2017)

Total

2017
2016

5,363,212
5,919,432

1,601,530
1,847,000

35,396
47,036

825,000
1,515,346

350,000
2,462,500

167,322
41,896

124,837
168,866

(41,520)
(504,136)

599,927
-

938
927

9,026,642
11,498,867

27.8%
33.1%

1 Reflects one-off payments.
2 Reflects long service leave entitlements paid on termination or accrued where 10 years of service has been reached.
3 Reflects post-employment benefits.
4 Reflects annual share-based payments expense for performance rights issued under the LTI plan, shares issued under the deferred STI equity plan and shares
purchased under the employee share scheme. The expense is calculated using the fair value of performance rights or shares at grant date, less any write-back
for performance rights lapsed as a result of non-market hurdles not attained. All share-based payments are equity-settled.
5 Reflects the percentage of total remuneration that is performance-related (short-term and long-term cash settled STI and shared-based payments relating to
the LTI and STI plans).
6 Reflects remuneration in relation to Mr Stevens' position as CEO from 1 August 2016. Remuneration relating to his non-executive directorship is disclosed in the
non-executive director fees table on page 26.
7 Mr Hogben was promoted from Group Executive Operations to Chief Operating Officer from 2 January 2017.
8 Following a restructure during the year, these Executives ceased to be classified as KMP.

ASX Annual Report 2017 Remuneration report / 23

Remuneration report continued

Remuneration received or available in the financial year

The remuneration table below has been provided as additional non-statutory information to assist in understanding the total value of
remuneration received by KMP in the current and prior financial years.

Total fixed
remuneration1

Other
remuneration

STI awarded
and paid2

Total
payments

Deferred STI
award3

Deferred
share-based
awards4

Total
remuneration
received5

Previous year awards
that vested during the year

Year

2017

1,830,137

2017
2016

2017

2017
2016

600,000
450,000

850,000
700,000

1,000,000
1,000,000

585,364
475,000

267,397

390,547
625,000

-
1,267,819

-
-

-
250,000

-
-

d=a+b+c

658,849

2,488,986

144,000
120,000

234,000
206,000

360,000
400,000

169,344
140,000

744,000
570,000

1,084,000
1,156,000

1,360,000
1,650,000

754,708
615,000

110,000
100,000

170,000
150,000

225,000
175,000

117,500
117,500

35,337

302,734

625,000
-

-
75,200

1,015,547
700,200

77,500
70,000

-
865,346

-
525,000

-
2,658,165

750,000
750,000

2016

318,442

150,000

70,000

538,442

2016

700,000

2016

600,000

150,800

850,800

150,000

160,000

760,000

157,500

-
-

265,435
-

-
-

g=d+e+f

2,488,986

854,000
670,000

1,254,000
1,306,000

1,850,435
1,825,000

872,208
732,500

302,734

1,093,047
770,200

750,000
3,408,165

538,442

1,000,800

917,500

Current
D J Stevens
Managing Director and CEO6
(commenced 1 August 2016)

R Aziz
Chief Financial Officer

A J Harkness
Group General Counsel

P D Hiom
Deputy CEO

T J Hogben
Group Executive Operations7

H J Treleaven
Chief Risk Officer
(commenced 1 March 2017)

Former
A J Bardwell
Chief Risk Officer
(ceased 10 February 2017)

Total

2017
2016

5,523,445
6,136,261

625,000
1,515,346

1,601,530
1,847,000

7,749,975
9,498,607

1,450,000
1,670,000

265,435
-

9,465,410
11,168,607

1 Fixed remuneration comprises salary, superannuation, non-monetary benefits and share-based payments that have been salary sacrificed.
2 The portion of STI awarded for the financial year in cash. The remaining portion of STI in respect of FY17 but deferred for two and four years, is shown in the
Group Executive KMP STI allocations for FY17 table on page 25.
3 This relates to the payment of the cash-based STI awarded in July 2015 (2016: July 2014) and deferred for two years.
4 This relates to the vesting of the September 2013 share-based LTI offer. It has been calculated using the total number of shares vested and the ASX-quoted share
price at vesting date. No deferred share-based awards vested in FY16.
5 The STI and deferred award payments shown as being received in the financial year were made shortly after the conclusion of the financial year.
6 Reflects remuneration in relation to Mr Stevens' position as CEO from 1 August 2016. Remuneration relating to his non-executive directorship is disclosed in the
non-executive director fees table on page 26.
7 Mr Hogben was promoted to Chief Operating Officer from 2 January 2017. Prior to this date he was the Group Executive Operations.
8 Following a restructure during the year, these Executives ceased to be classified as KMP.

/ ASX Annual Report 2017 Remuneration report

Remuneration report continued

KMP STI allocations for FY17

Current
D J Stevens

R Aziz

A J Harkness

P D Hiom

T J Hogben

H J Treleaven

Total STI awarded1

STI portion deferred2

STI target

1,830,137

400,000

650,000

1,000,000

392,000

88,342

1,647,123

360,000

585,000

900,000

423,360

88,342

90%

108%

100%

988,274

216,000

351,000

540,000

254,016

53,005

1 Total STI award including cash payment and deferred component.
2 This represents the value of the STI award that is deferred until 1 July 2019 and 1 July 2021. The deferred STI awards are subject to continued satisfactory
performance during the deferral period.

KMP LTI allocations for FY17

The following table shows the movement during the financial year in the number of performance-related rights over issued ordinary shares
in ASX held directly, indirectly or beneficially by the KMP, including their personally related parties:

Current

D J Stevens

P D Hiom

Held at
1 July 2016

70,581

Granted as
compensation
during the year

Vested during
the year

Lapsed during
the year

Held at
30 June 2017

20,889

10,445

(5,419)

(24,689)

20,889

50,918

No other KMP had performance-related rights over issued ordinary shares in ASX directly, indirectly or beneficially.

Value of KMP LTI allocations for FY17

The following table shows the minimum and maximum values of performance rights that may be received by KMP as remuneration in
future financial years:

Grant date:
Vesting date:

Current

D J Stevens

P D Hiom

23 September 2014
24 September 2017

30 September 2015
1 October 2019

28 September 2016
29 September 2020

Min $1

Max $2

Min $1

Max $2

Min $1

Max $2

N/A

749,991

N/A

304,377

619,986

310,008

1 Since the performance rights are issued at zero exercise price, their minimum total value is nil, on the basis that they will not vest if the applicable performance/
vesting conditions are not met.
2 The amounts represent the maximum fair value for future years of the performance rights yet to vest, as at their grant date. The maximum total value is the
number of rights issued multiplied by the weighted average fair value.

No other KMP had performance-related rights over issued ordinary shares in ASX directly, indirectly or beneficially.

ASX Annual Report 2017 Remuneration report / 25

Remuneration report continued

KMP holdings of ordinary shares

Current
D J Stevens
(commenced 1 August 2016)

R Aziz

A J Harkness

P D Hiom

T J Hogben

H J Treleaven
(commenced 1 March 2017)

Former
A J Bardwell
(ceased 10 February 2017)

Held at
1 July 2016

Received on vesting of
rights over deferred
shares

Allocated under
deferred STI plan

Other changes

Held at
30 June 2017

11,500

28,545

4,577

30,295

N/A

4,930

5,419

N/A

3,507

6,021

11,691

4,092

N/A

(5,000)

N/A

11,500

32,052

10,598

42,405

4,111

N/A

Non-executive director fees for FY17

Details of the remuneration of the non-executive directors of ASX are set out in the following table. Remuneration includes all fees received
as directors of ASX as well as subsidiary boards and committees.

Current

R Holliday-Smith

Y A Allen

M B Conrad
(appointed 1 August 2016)

K R Henry

P R Marriott

R C Priestley
(appointed 17 May 2017)

H M Ridout

D Roche

P H Warne

Former
J S Segal
(ceased 1 September 2015)
D J Stevens1
(appointed executive
director on 1 August 2016)
Total

Year

2017
2016

2017

2017
2016

2017

2017
2016

2016

2017
2016

Base fees

Subsidiary boards and
committees

Post-employment
superannuation

475,000
425,000

150,000
150,000

138,068

150,000
150,000

19,038

150,000
150,000

25,679

12,636
150,000

1,544,742
1,500,679

50,000
50,000

85,000
80,208

85,000
85,000

150,000
150,000

85,000
71,667

120,000
73,958

115,000
115,000

19,688

7,160
85,000

697,160
730,521

19,616
19,308

13,117

19,616
19,308

1,809

19,616
14,481

19,616
18,894

19,616
19,308

4,310

1,881
19,308

154,119
153,533

Total

544,616
494,308

254,616
249,516

151,185

254,616
254,308

319,616
319,308

20,847

254,616
236,148

289,616
242,852

284,616
284,308

49,677

21,677
254,308

2,396,021
2,384,733

1 This is the portion of Mr Stevens' remuneration relating to his position as a non-executive director. The remuneration in relation to his position as CEO from
1 August 2016 is disclosed in the statutory remuneration of Group Executive KMP table on page 23.

/ ASX Annual Report 2017 Remuneration report

Remuneration report continued

Equity holdings of non-executive directors

No performance rights have been granted to ASX non-executive directors.

The table below summarises the movements in holdings of ordinary shares in ASX held directly, indirectly or beneficially by each ASX
non-executive director and their personally related entities.

Current
R Holliday-Smith

Y A Allen

M B Conrad
(appointed 1 August 2016)

K R Henry

P R Marriott

R C Priestley
(appointed 17 May 2017)

H M Ridout

D Roche

P H Warne

Held at
1 July 2016

Other
changes

Held at
30 June 2017

Holding at
17 August 2017

12,000

5,000

N/A

5,000

5,316

N/A

5,000

10,000

6,000

2,000

12,000

5,000

2,000

5,000

10,000

6,000

12,000

5,000

2,000

5,000

5,316

5,000

10,000

6,000

Further details of the Board director shareholding policy for non-executive directors is set out on page 9 of this report.

ASX Annual Report 2017 Remuneration report / 27

Operating and financial review

The Operating and Financial Review outlines ASX’s activities, perfor-
mance, financial position and main business strategies. It also
discusses the key risks and uncertainties that could impact ASX and
its subsidiaries (together referred to as the Group) and its ability to
achieve its financial and other objectives.

Business model and operating environment

ASX is a multi-asset class and integrated exchange group. The Group
operates markets for cash equities and derivatives, and provides a
full service offering including listings, trading, clearing, settlement,
registry, and information and technical services. ASX operates
a significant part of the infrastructure that supports Australia’s
financial markets.

The business is conducted through a number of regulated legal
entities. ASX holds market operator licences and clearing and
settlement licences to undertake its activities. ASX is subject to
oversight by the Australian Securities and Investments Commission
(ASIC) and the Reserve Bank of Australia (RBA).

ASX services companies and other issuers that list equity and debt
securities on the exchange, as well as a wide range of retail and
institutional investors that invest in and trade those securities. Many
of ASX’s services are provided through intermediaries including
stockbrokers, Australian banks and Australian-based international
banks. Clients of these intermediaries include retail and corporate
investors, asset managers, custodians and other financial market
participants.

While ASX’s operations are primarily based in Australia, the Group
services both domestic and international customers, and some of
its services are accessible from offshore.

Revenue is earned by ASX at various stages of the value chain as
discussed below.

Primary markets capital formation – Listings and Issuer Services
ASX, through its listing rules and infrastructure, provides a facility
for companies to list, raise capital and have their securities publicly
traded.

The Group provides a range of services to issuers of capital, including
the generation of security holding statements and other shareholder
and sub-register services. Along with the shares of companies, ASX
lists debt securities (including government debt securities) and
exchange-traded products.

The Group earns revenue from listed entities for initial listing, annual
listing, secondary capital raisings, and for issuer services. The main
drivers of revenue in this category include the:

• number of listed entities and their market value

• number and value of initial public offerings (IPOs)

• level of corporate actions, such as secondary capital raisings

• level of retail trading activity and the resulting number of hold-

ing statements.

ASX faces competition for listings from other exchanges both domes-
tically and internationally. There are also other non-public means
of raising capital, such as private equity funds and venture capital,
which compete with the ASX primary market.

/ ASX Annual Report 2017 Operating and financial review

Derivatives and OTC Markets
ASX offers exchange-traded derivatives, including the trading and
clearing of futures and options on futures on interest rate, equity
index, agricultural and energy contracts, as well as exchange-traded
options over individual securities. The number of contracts traded
is the primary revenue driver. ASX provides central counterparty
clearing (CCP) of these exchange-traded derivatives as well as
clearing of over-the-counter (OTC) derivatives through a licensed
clearing subsidiary, ASX Clear (Futures). This entity provides risk
management services supported by clearing participant collateral
and funds provided by both ASX and participants, which are available
in the event participants fail to meet their obligations. Competition
comes from offshore exchanges and OTC products. Clearing of
futures and options occurs exclusively in Australia by ASX, while
clearing of OTC derivatives may be undertaken by certain foreign-
domiciled clearing entities.

Austraclear
Austraclear provides settlement, depository and registry services
for debt securities and cash transactions. ASX’s model for debt
securities settles transactions on a trade-by-trade basis, which
provides for certainty of settlement. The number of transactions
is the main revenue driver.

Depository services are provided through the Austraclear Central
Securities Depository (CSD). These securities consist of fixed income
securities, including government bonds. Settlement of transactions
on these securities occurs through real-time gross settlement (RTGS).
The value of securities held is the main revenue driver.

Registry services are provided whereby Austraclear facilitates secu-
rity registration and the subsequent cash transfers associated with
the terms of the individual securities. The main drivers of registry
revenue are the number and value of securities held in the registry.

The ASX Collateral Service allows customers of ASX to utilise collat-
eral held in Austraclear to meet obligations to other customers or
to ASX’s clearing subsidiaries.

Secondary markets – Trading Services
Trading Services comprises the trading of securities in the cash
market as well as the information and technical services offered
by ASX.

Cash market comprises the trading of cash market securities and
includes equity (shares), warrants, exchange-traded funds and listed
debt securities. The value of turnover transacted on the ASX market
is the primary revenue driver. There is competition in trading from
another equity market operator and off-market trading facilities,
which are often referred to as ‘broker dark pools’.

ASX provides information and technical services to its clients to
support their secondary market activities. Information services
include the provision of real-time market data for the cash and
derivative markets, company news, and index and other reference
data. The main revenue driver is the number of end-users accessing
real-time market data and customer enterprise agreements for the
provision of data.

Operating and financial review continued

Technical services consists of four main categories of services to
facilitate market connectivity and access to ASX and third-party
services by customers. These are:

Following is a discussion of the contribution of each of the above
services to the Group’s segment revenue and a review of the Group’s
operations over the financial year.

Results of operations

The Group’s profit after tax for the year ended 30 June 2017 increased
by 1.9% to $434.1 million. A summary income statement in line with
the Group’s segment note is reflected in the following table:

Operating revenue

Operating expenses

EBITDA

Depreciation and amortisation

EBIT

Interest and dividend income

Profit before tax

Tax expense

Profit after tax

FY17
$ million

FY16
$ million

Variance %
fav/(unfav)

764.1

(180.9)

583.2

(46.0)

537.2

79.2

616.4

(182.3)

434.1

746.3

(170.6)

575.7

(42.7)

533.0

73.1

606.1

(179.9)

426.2

2.4

(6.0)

1.3

(7.8)

0.8

8.4

1.7

(1.3)

1.9

Earnings per share
The Group’s basic earnings per share (EPS) in FY17 were 224.5 cents
(FY16: 220.4 cents). The 1.9% increase in EPS compared to the prior
comparative period (pcp) resulted from higher earnings.

Dividends
ASX paid an interim dividend of 102.0 cents per share in March
2017 and directors have determined a final dividend of 99.8 cents
per share. Total dividends per share of 201.8 cents are 1.9% higher
than the prior year, and reflect the increase in earnings.

The Board’s dividend policy is to pay 90% of underlying earnings
after tax. This is reviewed each time the Board considers payment
of a dividend. Underlying earnings (NPAT) are results from oper-
ations adjusted for any significant revenues or expenses such as
those associated with major restructuring or transactions. No such
adjustments were applied in the current or prior financial year.

• liquidity access via ASX platforms

• community and connectivity services including a secure low

latency communication network via ASX Net

• application services including terminals to access ASX platforms

• hosting of customer infrastructure within the ASX Australian

Liquidity Centre (ALC).

Revenue drivers for each category consist of the volume of services
used by customers, such as the number of connections to ASX
markets or the number of cabinets hosted in the ALC.

Equity Post-Trade Services
ASX’s clearing and settlement infrastructure provides risk manage-
ment services to financial market participants and investors. ASX’s
post-trade operations are backed by significant Australian-based
capital and collateral, and are overseen by Australia’s regulators.
Clearing and settlement of cash markets is undertaken by ASX for
the entire Australian marketplace.

Cash market clearing
ASX provides CCP services to the cash market through a licensed
subsidiary, ASX Clear. As a CCP, the clearing subsidiary becomes the
central counterparty to every trade and assumes the credit risk of
each ASX clearing participant. The CCP supports these risk manage-
ment activities with collateral lodged by clearing participants and
significant ASX capital available in the event of participant failure
to meet their obligations. In certain circumstances, ASX may also
call further funds from participants. The main revenue driver is the
value of equity securities centrally cleared.

Cash market settlement
ASX’s settlement services help reduce counterparty and systemic
risk, and provide transaction efficiency and certainty for end-inves-
tors. Settlement occurs on a delivery-versus-payment (DvP) basis
and involves the exchange of cash for physical delivery of securities.

Cash market settlement is conducted through the Clearing House
Electronic Sub-register System (CHESS). This system registers the
title (ownership) of shares. ASX’s model for cash market settlement
maximises efficiency through the netting of settlement obligations in
each individual security and the netting of all payment obligations,
while minimising the risk of settlement failure. The main driver of
settlement revenue is the number of settlement messages.

ASX holds a significant amount of capital to support the risks
associated with the settlement activities it undertakes for the
Australian equity market.

ASX clears and settles transactions in both ASX and non-ASX
listed securities undertaken on another licensed market through
a Trade Acceptance Service. This allows for the seamless clearing
and settlement of these transactions alongside ASX transactions.

ASX Annual Report 2017 Operating and financial review / 29

Operating and financial review continued

Operating revenue

Operating revenue as reflected in the Group's segment note in FY17
increased 2.4% to $764.1 million.

The following table depicts the contribution to operating revenue
from ASX’s various business activities. The percentage contribution
of each category along with further revenue detail are illustrated in
the pie chart and reflect ASX’s diversified business mix.

Revenue category

Listings and Issuer Services

Derivatives and OTC Markets

Trading Services

Equity Post-Trade Services

Other revenue

Total operating revenue

FY17
$ million

FY16
$ million

Variance %
fav/(unfav)

192.7

269.1

196.0

104.4

1.9

764.1

192.7

265.8

182.8

102.0

3.0

746.3

1.2

7.2

2.3

(36.6)

2.4

Operating revenue

Cash Market
Clearing
7%

Cash Market
Trading
6%

Cash Market
Settlement
7%

Equity
Post-Trade
Services
14%

Information
Services
11%

Trading
Services
26%

Listings
20%

Listing and
Issuer Services
25%

Issuer Services
5%

Equity Options
3%

Derivatives and
OTC Markets
35%

Futures and OTC Clearing
26%

Technical
Services
9%

Austraclear
6%

Commentary on operating revenue for the various business activi-
ties is provided in the following pages. Details of activity levels that
drive a large portion of ASX’s revenue are contained on pages 77
to 79 of the Annual Report.

Listings and Issuer Services – $192.7 million, flat on pcp
In FY17, the number of new listings increased, while the total amount
of capital raised was lower than the pcp.

Total capital raised ($billion)
88.9

78.6

66.0

46.4

56.0

FY13

FY14

FY15

FY16

Secondary capital

Scrip-for-scrip

FY17
IPO capital

• Annual listing revenue – up 5.5% to $79.3 million. There were
2,239 entities listed on ASX at 30 June 2017 (30 June 2016:
2,204). Increases in market capitalisation combined with fee
changes were the main drivers supporting the increase in
revenue.

• Initial listing revenue – down 13.8% to $16.0 million. While there
were 152 IPOs compared to 124 in the prior year, IPO capital
raised was $14.7 billion, down from $23.6 billion. In FY17, list-
ings were from a range of industry sectors, with 23 initial list-
ings from the technology sector and 30 foreign initial listings.

• Secondary capital raisings revenue – up 3.1% to $46.5 million.

An increase in the number of secondary capital raisings
combined with fee changes were the main drivers supporting
the increase in revenue. The total level of secondary capital
raised was 24.9% lower than the pcp, reflecting smaller capital
raisings due to the absence of the large bank capital raisings
that occurred in the pcp.

• Issuer services revenue – down 2.0% to $42.4 million. The

decrease in revenue resulted primarily from a decline in the
number of CHESS holding statements, which were down 2.8%.

/ ASX Annual Report 2017 Operating and financial review

Operating and financial review continued

Derivatives and OTC Markets – $269.1 million, up 1.2%
The revenue increase resulted from:

Cash Market Trading – up 13.8% to $46.3 million
The increase in revenue resulted from:

• Futures and OTC – up 1.6% to $197.4 million. The growth in

revenue was due to a 4.1% increase in volumes, partly offset
by higher rebates. The value cleared through the OTC Clearing
service increased significantly to $5.2 trillion compared to
$2.7 trillion in the pcp.

ASX futures and options on futures
contract volumes (million)

116

118

137

126

142

FY13

FY14

FY15

FY16

FY17

• Equity options – down 6.4% to $21.7 million. While the total
volume of contracts traded was up 2.2%, the decrease in
revenue was due to a change in the mix of products and users.
Single stock option volumes were up 5.2% while index option
volumes were down 18.6%.

• Austraclear – up 3.4% to $50.0 million. The increase in revenue
was primarily due to higher average balances in the depository
and increased transactions. The ASX Collateral service also
grew with the value of assets increasing 237% to $16.2 billion at
30 June 2017 compared to $4.8 billion in the pcp.

Trading Services – $196.0 million, up 7.2%
The following table depicts the growth in ASX on-market value
traded over the past five years.

ASX on-market value traded ($billion)

• Higher on-market trading of $4.3 billion per day, up 2.3%. ASX’s
share of on-market trading averaged 87.5% in FY17, compared
to 88.7% in FY16.

• Increased trading through Centre Point and the auction service,
both of which attract higher fees. In FY17, Centre Point value
traded was $107.0 billion, representing 9.9% of ASX on-market
value traded. Trading through the auction service represented
22.0% of on-market value traded. Together these accounted for
49.5% of ASX trading revenue.

• The participant trading rebate scheme was discontinued from

1 July 2016; $2.2 million was rebated in the pcp.

Information Services – up 3.0% to $82.5 million
The increase in revenue resulted from:

• Revenue from the BBSW interest rate benchmark which ASX

commenced providing in January 2017.

• Fee changes to certain data services.

Technical Services – up 8.4% to $67.2 million
The increase in revenue resulted from:

• Liquidity access – up 5.8% to $33.1 million. Over the year,

the total number of ALC service connections increased from 819
to 871.

• Community and connectivity – up 13.3% to $19.6 million, attrib-
uted to the growth in users of ASX technical services provided
at the ALC and through its data networks.

• Application services – down 7.5% to $4.9 million. The revenue
was impacted by a lower number of installation charges in the
ALC.

• Hosting – up 18.4% to $9.6 million. In FY17, the number of

customer cabinets hosted in the ALC increased from 231 to
285 at 30 June 2017.

Equity Post-Trade Services – $104.4 million, up 2.3%
Cash market clearing – down 1.6% to $53.3 million
The decrease in revenue resulted from:
• The daily average on-market value cleared increased 4.0%
to $4.6 billion reflecting the increase in trading across all
venues in Australia.

829.6

831.0

966.5

1,059.2

1,079.5

• ASX reducing clearing fees by 10% from 1 July 2016.

• No clearing revenue sharing rebate paid, compared to

$3.2 million in the pcp.

Cash market settlement – up 6.8% to $51.1 million
The increase in revenue resulted from:

• Increased trading activity levels led to a 2.9% increase in the

dominant settlement messages compared to FY16.

• The settlement revenue sharing rebate was $1.1 million

compared to $2.1 million in the pcp.

FY13

FY14

FY15

FY16

FY17

Continuous trading

Auctions

Centre Point

ASX Annual Report 2017 Operating and financial review / 31

Operating and financial review continued

Operating expenses

Financial position

As reflected in the segment note, underlying operating expenses
(excluding finance costs and depreciation and amortisation)
increased 6.0% to $180.9 million.

At 30 June 2017, the net assets of the Group were $3,908.1 million,
up 2.2% from 30 June 2016.

A summary balance sheet is presented below.

Operating expenses

Staff

Occupancy

Equipment

Administration

Variable

ASIC supervision levy

Operating expenses

FY17
$ million

FY16
$ million

Variance %
fav/(unfav)

110.6

14.6

27.9

18.2

6.7

2.9

101.1

14.1

27.0

19.2

6.3

2.9

180.9

170.6

(9.3)

(3.3)

(3.5)

5.3

(7.7)

(6.0)

Staff costs increased 9.3% to $110.6 million. The increase resulted
from higher average headcount and the annual remuneration review.
The average full-time equivalent (FTE) headcount increased from
534 in FY16 to 556 in FY17. As at 30 June 2017, ASX employed 554
FTE staff. The increase in FTE supports the new business initiatives
and technology upgrades, including ASX's evaluation of distrib-
uted ledger technology. Additional sales resources have also been
recruited reflecting the competitive environment.

Other operating costs increased 1.3% to $70.3 million due to higher
equipment and occupancy costs supporting ASX's business initi-
atives. The increase in variable costs reflects increased postage,
while discretionary costs were contained.

Depreciation and amortisation expenses increased 7.8% to $46.0
million, reflecting ASX's investment in technology in recent years.

Capital expenditure

The Group invested $50.3 million in capital expenditure during
the year, compared to $50.2 million in FY16. Expenditure included
the development of a number of key projects, such as distributed
ledger technology for the potential CHESS replacement as well as
implementation of a new futures trading platform.

Net interest and dividend income

Net interest and dividend income increased 8.4% to $79.2 million.
Net interest consists of two components: interest earned on ASX’s
cash balances and net interest earned from the investment of cash
collateral balances lodged by participants.

Interest income on ASX’s cash balances declined 20.0% to $17.8
million as a result of lower interest rates. Net interest earned
from the investment of participant balances increased 25.9% to
$47.5 million. This increase was driven by a 32.9% increase in the
FY17 average collateral and commitment balances to $6.1 billion.
Investment earnings on this portfolio declined slightly to 37 basis
points compared to 41 basis points above the official overnight
cash rate, as the portfolio was transitioned so as to meet the new
Financial Stability Standards requirements.

Dividend income from ASX’s shareholding in IRESS Limited increased
6.1% to $13.9 million.

/ ASX Annual Report 2017 Operating and financial review

30 June
2017
$ million

30 June
2016
$ million

Variance
%

Assets
Cash and available-
for-sale financial assets

Intangibles (excluding software)

Investments

Other assets

Total assets

Liabilities

9,085.6

7,072.8

2,326.6

497.8

1,301.7

2,317.6

424.8

636.4

13,211.7

10,451.6

Amounts owing to participants

8,084.7

6,088.2

Other liabilities

Total liabilities

Equity

Capital

Retained earnings

Reserves

Total equity

1,218.9

9,303.6

539.3

6,627.5

3,027.2

622.2

258.7

576.9

220.0

3,908.1

3,824.1

28.5

0.4

17.2

104.5

26.4

32.8

126.0

40.4

7.9

17.6

2.2

Notable movements in the balance sheet were as follows.

Investments – up $73.0 million or 17.2%
Investments reflect ASX’s 18.8% shareholding in IRESS Limited, a
listed entity providing financial market and wealth management
technology solutions; a 49% shareholding in Yieldbroker Pty Limited,
an unlisted entity operating licensed electronic markets for trading
Australian and New Zealand debt securities; and an 8.5% sharehold-
ing in Digital Asset Holdings LLC (DAH), an unlisted US domiciled
technology entity. The growth reflects ASX's purchase of additional
IRESS shares and the increase in their share price.

Amounts owing to participants – up $1,996.5 million or 32.8%
As part of its clearing operations, the Group holds a significant
amount of collateral lodged by participants to cover cash market
and derivatives exposures cleared through its licensed CCPs. The
growth primarily resulted from an increase in open positions held
in interest rate and equity index futures as well as equity margins
and OTC derivative positions.

The increase in participant balances results in a corresponding
increase in cash and available-for-sale financial assets, as the
balances are invested by ASX.

Other assets and other liabilities
The increase in other assets and other liabilities is predominantly
due to participants' margins receivable the next day. These are
recognised as a receivable and payable on the balance sheet.

Operating and financial review continued

Business strategies and prospects for future
financial years

ASX's revenue is affected by activity levels in Australia’s financial
markets, which are impacted by a number of factors including
general economic conditions. The level of activity impacts on ASX’s
revenue as many fees are linked to market activity through the
number of contracts traded, and by the values of transactions, the
equity index and capital raisings.

In addition to activity levels, ASX’s strategies may be impacted by
existing or new competitors both domestically or globally. In this
context, ASX’s strategy is to support the competitiveness and growth
of Australia’s financial markets, and to invest in new services that
investors and intermediaries value.

While the underlying macro drivers plus ASX initiatives are expected
to support ASX growth, key elements of the ASX strategy are to:

• provide a core customer value proposition through ASX's brand,

access to liquidity, and capital and operational efficiencies

• expand the range of products and services to intermediaries

and end-investors

• provide world-class, globally connected financial infrastructure

• invest in leading technology that supports customer require-

ments and provides efficiencies

• provide technical solutions for efficient and cost-effective

access to financial markets

• be customer centric in everything we do.
ASX advocates regulatory settings that support investors and
growth.

Following is a discussion of key strategic developments in each
business. The key drivers of revenue in future financial years will
continue to be those noted in the business model and operating
environment section of this report, as well as the success of the
key business strategies discussed below.

Listings and Issuer Services
ASX has implemented a range of initiatives in recent years aimed
at enhancing the attractiveness of Australia as a place to list and
raise capital. In December 2016, ASX updated the listings admission
rules to further strengthen the ASX brand as a premium listing
venue globally.

Consistent with the strategy of providing a premier listing venue,
ASX has a particular focus on increasing the number of foreign
companies and those from the technology sector listed on the
exchange. ASX has 266 foreign entities and 207 technology
companies listed. Foreign listings include entities from New
Zealand, Israel, the US and Asia.

In order to give the broadest choice to customers, ASX is expand-
ing the range of products and asset classes available for issuers
and investors. Some of the products that complement traditional
equities include:

• government bonds – ASX enables clients to trade Australian

Government bonds on the exchange in the same way as equity
trading

• corporate bonds – ASX supports Government initiatives to
promote and expand the Australian corporate bond market

• exchange-traded products (ETPs) – in recent years ASX has

focused on increasing the number and range of ETPs. There are
213 ETPs listed on ASX totalling $29.5 billion

• managed funds (mFund) – mFund allows investors to apply
for and redeem unlisted managed funds using their broker
platform. At 30 June 2017, there were 174 funds available on
mFund through 18 brokers. During the year ASX was successful
in gaining ASIC approval for long-form funds to be quoted on its
mFund settlement service.

Derivatives and OTC Markets
ASX’s strategy is to continue to develop new products and services,
increase distribution, and provide flexible and cost-effective trading
and clearing platforms.

In addition to increasing the products and services available for
trading, ASX has strategies designed to attract additional users
to its products. These include attracting overseas traders to use
ASX derivatives products by making it easier for them to connect
through ASX’s data network (ASX Net Global). ASX is attracting a
growing number of offshore traders to its derivatives market and
the volume of trading during the night session increased to 31% in
FY17, up from 22% in FY12.

In March 2017, ASX introduced a new trading platform for trading
futures and options, replacing a legacy proprietary platform. The
new platform provides significant benefits to customers including
richer functionality, technical enhancements, and improved latency
and pre-trade risk management. The new trading platform makes
ASX a more attractive venue to trade futures and has been well
received by customers.

During the year a new suite of equity options products were added
including weekly options. The OTC Clearing service trading hours
were extended in order to capture liquidity during the northern
hemisphere trading day. Further enhancements to the OTC Clearing
service are planned to increase the attractiveness of the service,
including the ability to clear client transactions. During the year,
notional value cleared through this service increased 88.4%.

Through ASX’s Austraclear platform, ASX delivers collateral effi-
ciency to customers of its collateral management service. This service
allows customers to utilise collateral held in ASX’s Austraclear
debt registry to meet obligations to other customers or to ASX’s
clearing subsidiaries.

Trading Services
ASX performed well in a competitive equity trading market with a
market share of 87.5% of on-market traded value during the year.

ASX’s strategy is to continue to innovate in the provision of services
in order to maximise the attractiveness of trading on ASX and meet
the needs of a varied customer base. This includes providing leading
price discovery and liquidity access execution types, such as the
auction service and Centre Point.

ASX’s auction service accounted for 22.0% of on-market value
transacted on ASX and 28.8% of on-market revenue. The Centre
Point order type is an example of ASX creating an innovative suite
of products following feedback from end-investors. During FY17,
Centre Point order types accounted for 9.9% of on-market value
transacted on ASX and 21.9% of ASX’s trading revenue. The chart
following shows the growth in Centre Point activity and the inno-
vations within this product launched over the past five years.

ASX Annual Report 2017 Operating and financial review / 33

Operating and financial review continued

Centre Point value traded ($billion)

107.0

Equity Post-Trade Services
ASX is the sole provider of equity post-trade services to the
Australian market consisting of clearing and settlement of cash
market transactions.

74.9

78.9

61.1

36.9

FY13

FY14

FY15

Standard

Preference

Block

Dark limit

FY16
Sweep

Single ﬁll

FY17

Within the information and technical services offerings, ASX’s
strategy is predominantly driven by the needs of clients in equities
and derivatives. These requirements include hosting of hardware,
connectivity as well as low latency (high speed) services to access
information and ASX’s trading platforms.

Demand for information services is impacted by the level of activity
and the number of users accessing ASX market data. ASX’s services
are being tailored to meet changing customer requirements, such
as electronic usage of data. ASX provides enterprise licences for
large users of data that offer pricing certainty to customers along
with standard monthly royalty plans.

From January 2017, ASX commenced the administration and provi-
sion of the BBSW interest rate benchmark. Users of this benchmark
include both domestic and global entities. During FY18, ASX will
introduce a new strengthened calculation methodology working
with stakeholders and regulators. ASX’s independence and strength
in operating critical infrastructure bodes well for the integrity of
this critical benchmark.

ASX’s success in expanding its technical services follows the invest-
ment in the ALC and communications network (ASX Net). ASX’s aim
is to grow the community of financial service providers it supports.
ASX will continue to invest in its product and service offerings in
order to become the leading provider for the financial community.

While innovative service offerings further diversify ASX’s revenue,
an important determinant of demand for ASX’s information will be
the underlying level of activity and the number of users wishing
to access data and trading platforms. These depend on prevailing
market conditions and the product offering in the cash and derivative
markets. ASX's strategy also includes expanding the information
data services to related areas.

ASX’s strategy within equities post-trade is to continue to innovate
in order to improve the efficiency of clearing and settlement, and
provide benefits to issuers and investors, including lowering the
overall costs within the market.

ASX has invested a considerable amount of effort over the past two
years evaluating the suitability of distributed ledger technology as
a possible equities post-trade solution. This included the financial
investment in Digital Asset Holdings, a US-based technology firm
with whom ASX has partnered for the evaluation of this technology.
ASX is on track with its analysis of distributed ledger technology as
a possible platform for the settlement of cash equity trades. ASX is
currently developing an enterprise grade platform that may form
the basis of the CHESS replacement. ASX expects the replacement
platform to offer improved security, trust, efficiency and timeliness,
as well as the opportunity to further expand the range of services
to customers in order to reduce cost and provide efficiencies to the
overall market. An assessment is expected late in calendar 2017
on whether distributed ledger technology will be utilised for the
equities post-trade platform.

Engagement with clients
ASX has a large and diverse customer base, including 2,239 listed
companies and issuers, and around 136 participants in the cash
equities and derivatives markets. In addition, ASX provides services
to other market operators and various specialist businesses in the
Australian financial markets.

ASX continues to build a more customer-centric corporate
culture. ASX engagement with customers extends to industry
partners including the Australian Financial Markets Association,
Stockbrokers Association of Australia, Financial Services Council,
Australian Council of Superannuation Investors, Australian Custodial
Services Association, Australian Payments Network and Australian
Shareholders’ Association. These groups represent many of ASX’s
customers and have an interest in the quality and development of
Australia’s financial markets.

ASX’s engagement includes significant consultation with customers
as well as industry forums and specific technical and risk commit-
tees that engage on various areas of interest. The consultation on
equities post-trade business requirements is an example where
ASX is increasing its engagement with customers.

/ ASX Annual Report 2017 Operating and financial review

Operating and financial review continued

Risks

The Group’s operations and financial results are subject to a number
of risks. ASX has a strong track record of managing the wide range
of risks that arise from operating and servicing Australia’s financial
markets. Many of these risks are not directly in the control of ASX.
The main risks affecting ASX include:

• the economic environment and market activity levels

• changes to regulation, market structure and competition

• operational risks in technology infrastructure and processes

(including cyber risk)

• clearing and settlement risk, as well as increased capital

requirements

• investment risk on cash and other investments.

The economic environment and market activity levels
The ASX businesses, financial position and operating results can be
impacted by the levels of market activity. This includes the number
of listed issuers, the number of new company listings, the volume
and value of financial instruments traded, the number of settlement
messages, and similar factors. Market activity levels are significantly
influenced by economic performance, government policy and general
financial market conditions in Australia and internationally. Slowing
economic conditions can lead to a reduction in activity and revenue.
Changing levels of volatility may also impact on ASX’s activities.
ASX’s diversified business model mitigates some of these risks,
as revenue is earned from a range of activities and services. The
expansion into new services is designed to further diversify the
Group’s revenue over time.

Changes to regulation and market structure
ASX operates in highly regulated markets. Changes to the market
structure in which it operates, and the regulations under which it
and its customers operate can impact ASX's businesses.

Licences
Several of the Group entities hold licences to operate financial
markets, such as securities and derivatives exchanges as well as
clearing and settlement facilities. These licences impose obligations
on the Group to comply with a range of conditions. Failure to meet
these obligations may result in reputational damage, action being
taken against the Group, financial penalties, or loss of the licences.
In addition to line management, the Group has enterprise risk,
internal audit and regulatory assurance functions, and executive
and Board oversight to monitor these risks. ASIC and RBA assess
the Group’s licensed subsidiaries.

The clearing and settlement subsidiaries have separate boards to
oversee these operations.

The licence obligations may result in the Group undertaking signif-
icant programs or investments in order to meet licence conditions.
These can impact on ASX as well as ASX’s customers. ASX seeks to
manage these risks by engaging with regulators and customers to
achieve the best possible outcome for Australia’s financial markets,
and by monitoring the effectiveness of the arrangements.

Market structure and competition
ASX faces competition domestically and internationally in many
parts of its business. Competition can come from other exchanges
as well as non-traditional sources that may impact ASX's revenues
and expenses.

Changes to the existing financial market structure can affect the
strategic market position and performance of ASX. An example of
a change in market structure was the licensing of another market
operator in the Australian cash equities market.

ASX is currently the only licensed clearing and settlement facility for
cash equities in Australia, although potential competition in clearing
could occur should an alternative clearing facility be licensed in
Australia. Any such competition would be expected to meet the high
standards set by regulators under the Financial Stability Standards
to which ASX already adheres.

In some of its businesses, ASX is facing competition from overseas
financial markets, such as the central clearing of OTC interest rate
swaps. Decisions by Australian regulators or overseas regulators
can impact on ASX’s relative competitive position. For example,
regulators have implemented location requirements for certain
systemically important services. Changes to these requirements
can impact on Australia’s and ASX’s competitiveness. ASX makes
significant investments in its business allowing Australia to continue
to have world-class financial markets. ASX’s strategy is to provide
a globally competitive service offering across its business.

While changes to the market structure are outside the control of
ASX, the company is actively engaged in providing input to regu-
lators and policymakers.

Regulations that affect ASX and its customers
Regulations can impact on the way ASX provides its services and
the attractiveness of its services to customers. Changes to domestic
or international regulations can pose risks to ASX. From time to
time, new regulations may provide opportunities for ASX to offer
new services to its customers. The development of ASX’s clearing
service for OTC derivatives flows from changing international and
domestic regulations.

Regulations may change over time and may require ASX to increase
the capital and liquidity it provides in support of the Group’s clearing
and settlement activities. Changing regulations also impact on the
level of capital and liquidity ASX customers are required to hold
in order to undertake their business through ASX. These changes
can lead to customers undertaking less activity through ASX. In
some instances, regulations may also benefit ASX by providing
capital efficiencies to customers who transact through licensed
exchanges such as ASX.

Regulations may also impact on the investment strategy that ASX
adopts in relation to capital and collateral balances held to support
its licensed clearing and settlement activities. Changes in regulations
over time may impact on earnings generated by the investment of
these balances. Investment earnings on collateral invested were
lower in FY17 as new regulatory investment guidelines were imple-
mented. The full impact of the changes applies from FY18.

ASX Annual Report 2017 Operating and financial review / 35

Operating and financial review continued

ASX and its customers incur costs from regulators for the regula-
tory oversight of markets. These costs, which are determined by
the regulators, are subject to change from time to time. In FY18,
ASX expects these charges to increase significantly over those
paid in FY17.

The Group seeks to manage the risks from changing regulations by
active engagement with regulators, policymakers and customers.
As regulatory settings, particularly international, are outside the
control of ASX, changes may impact on ASX’s business.

Operational risks in technology infrastructure and processes
The Group operates a number of technology platforms that facilitate
trading, clearing and settlement. Due to the complexity of and the
high reliance on this infrastructure, failure or other operational
incidents can impact on the functioning of markets and have a
financial impact on ASX. Clients and other third parties connect to
ASX via its proprietary network (ASX Net) and to the ASX website.
This exposes the Group to cyber security risks, particularly as the
frequency and sophistication of cyber attacks are increasing within
financial markets.

The Group seeks to reduce these risks by investing in its underlying
infrastructure, maintaining an understanding of trends in technology
and cyber security, and entering into strategic relationships with
specialist technology providers. The infrastructure and operations
are subject to regulatory oversight, and ASX has backup recovery
infrastructure and processes to reduce any impact from disruptions.

The Group’s operations and responsibilities cover a broad range of
services and functions. The way in which these responsibilities and
functions are discharged, and operational incidents or errors, can
impact on the financial performance of the Group and adversely
affect its reputation. ASX seeks to manage operational risk by
putting in place clear procedures, automating activities and by
following its enterprise risk framework. While these policies assist
in reducing the likelihood of events occurring, the high volume and
value of transactions on ASX means that operational incidents or
fraudulent activity could have a significant impact on the Group.

Clearing risk
The Group’s CCP activities expose it to credit, investment and liquid-
ity risk. In the event that clearing participants encounter financial
difficulties, a failure to meet their contractual obligations could
result. This risk is commonly referred to as clearing default risk
and is managed by a number of controls. These include enforcing
minimum financial and operating criteria for clearing participants,
requiring participants to provide collateral, holding pre-funded
financial resources, and maintaining established risk policies and
procedures to ensure that the counterparty risks are monitored
and proactively managed.

CCP activities expose the Group to investment and liquidity risk
on participants’ collateral balances. The Group is also exposed to
investment risk on its own cash reserves. The Group seeks to manage
these risks by investing cash with high quality counterparties,
maintaining sufficient cash reserves and marketable securities, and
regular forward planning and forecasting of liquidity requirements.
Furthermore, the Board has implemented policies that specify
concentration limits as well as maximum maturity limits.

The CCP pre-funded financial resources provided by ASX, which are
at risk of loss in the event of a default, currently total $250 million in

/ ASX Annual Report 2017 Operating and financial review

ASX Clear and $450 million in ASX Clear (Futures). These resources
and their application are fully described in note B1 to the financial
statements. The Group also has, under certain limited circumstances,
the obligation to provide further resources to fund these activities.

The management of clearing risk is important to the stability of
Australia’s financial markets, as the CCPs provide critical infrastruc-
ture for the orderly completion of transactions. For cash equity
transactions, the risk is typically the period between execution of
a trade and settlement; while in derivatives, the risk is typically the
daily movement in the value of the open positions or outstanding
contracts. Collateral is called daily by the CCPs and in some instances
intra-day. Additional collateral is called depending on market condi-
tions and the individual exposures of clearing participants. Such
collateral could however prove inadequate, or a default could occur
before the additional collateral is received.

Settlement risk
ASX settles equity (on average $4.9 billion per day) and debt
instrument (on average $66.8 billion per day) transactions on a
delivery-versus-payment basis. As such, it facilitates the orderly
exchange of securities for cash. Settlement errors expose the Group
to potential financial and reputational impacts.

The Group manages settlement risk by a range of measures, includ-
ing setting out rules and processes for settlement to occur and
having infrastructure (IT platforms and processes) in place to conduct
the settlement process.

Investment risk
ASX is exposed to counterparty risk in the event that an investment
counterparty, such as a bank or issuer of financial instruments,
fails. At 30 June 2017, ASX had approximately $8.1 billion of cash
collateral invested with a range of counterparties. In addition, it
had approximately $1 billion of Group cash invested, much of which
supports the clearing and settlement activities. Investment earnings
on the Group cash is impacted by the level of interest rates and is
also subject to the risk of investment counterparty default.

Updated Financial Stability guidelines have impacted on ASX’s
investment strategy for cash collateral lodged by participants. The
new guidelines have resulted in a repositioning of the portfolio
during FY17 into largely secured assets. As a result, earnings from
the investment of cash collateral have declined, with the full impact
expected from FY18.

ASX has significant equity investments in IRESS, Yieldbroker and
Digital Asset Holdings (DAH) (refer notes C1 and C2 of the financial
statements). The value of these investments is subject to change
based on the performance and strategy of each entity. A significant
decline in their financial performance and/or prospects may result in
a loss to ASX as the value of the investment may be required to be
reduced. The carrying value of the DAH investment is also subject
to change from movements in the AUD/USD as the investment is
denominated in USD. Foreign currency movements are recognised
through the equity reserve.

In addition, ASX has $2.3 billion of goodwill and other intangibles
recognised on balance sheet. The carrying value of these assets may
be impacted if the financial performance of ASX deteriorates or the
value of the specific intangible is eroded. Details of the carrying value
and analysis of possible impairment is contained in note D2 of the
financial statements. There have been no impairments recognised
on these assets to date.

Directors’ report

The directors present their report, together with the financial state-
ments of ASX Limited (ASX or the Company) and its subsidiaries
(together referred to as the Group), for the year ended 30 June 2017
(FY17) and the auditor’s report thereon. The financial statements
have been reviewed and approved by the directors on the recom-
mendation of the ASX Audit and Risk Committee.

The FY17 consolidated net profit after tax attributable to the owners
of ASX was $434.1 million (2016: $426.2 million).

Directors

The directors of ASX in office during the financial year and at the
date of this report (unless otherwise stated) were as follows:

• Mr Rick Holliday-Smith (Chairman)
• Mr Dominic J Stevens (Managing Director and CEO)1
• Ms Yasmin A Allen
• Ms Melinda B Conrad1
• Dr Ken R Henry AC
• Mr Peter R Marriott
• Mr Robert C Priestley2
• Mrs Heather M Ridout AO
• Mr Damian Roche
• Mr Peter H Warne
1 Mr Dominic J Stevens was appointed Managing Director and CEO, and Ms
Melinda B Conrad was appointed a non-executive director, on 1 August 2016
Mr Stevens was previously a non-executive director from December 2013.
2 Mr Robert C Priestley was appointed a non-executive director on 17 May 2017.

Directors’ meetings and attendance at those meetings for FY17
(including meetings of committees of directors) are disclosed on
page 9. The qualifications and experience of directors, including
current and recent directorships, are detailed on pages 5 to 7.

Company secretaries

Amanda J Harkness
Group General Counsel and Company Secretary,
Group Executive Corporate Affairs
BEc LLB (Hons)(ANU), MA (Macquarie), FGIA, FAIM, FAICD
During the year Ms Harkness was Group General Counsel and Company
Secretary. Ms Harkness has held senior adviser roles as a partner
in the Australian law firm Herbert Smith Freehills and at the
consulting firm McKinsey & Co. Ms Harkness has held executive
management roles in Telstra and a start-up joint venture funded
by British Telecom. She has worked in businesses in Australia, New
Zealand, Malaysia, Korea, Hong Kong and Japan.

On 12 July 2017, Ms Harkness resigned as Company Secretary.

Mr Daniel Csillag, BA LLB (UNSW), General Manager Company
Secretariat and Senior Legal Counsel, is a Company Secretary. As
Company Secretary, he is responsible for company secretarial and
corporate governance support across the Group. He has experience
in company secretariat roles from his time at ASX and other entities.

Report on the business

Principal activities
During the year the principal activities of the Group consisted of
providing:

• securities exchange and ancillary services

• derivatives exchange and ancillary services

• central counterparty clearing services

• registry, depository, settlement and delivery-versus-payment

clearing of financial products.

Review of operations
Information on the operations and financial position of the Group,
and its business strategies and prospects, is set out in the Operating
and Financial Review on pages 28 to 36.

Dividends
Information relating to dividends for the current and prior financial
year, including dividends determined by the Company since the end
of the financial year, is set out in note A2 of the financial statements
on page 48.

Significant changes in the state of affairs
There were no significant changes in the Group's state of affairs
during the year.

Events subsequent to balance date
From the end of the reporting period to the date of this report, no
matter or circumstance has arisen which has significantly affected
the operations of the Group, the results of those operations or the
state of affairs of the Group.

Likely developments
For further information about likely developments in the operations
of the Group, refer to the business strategies and prospects for
future financial years section in the Operating and Financial Review
on pages 28 to 36. The expected results from those operations
in future financial years have not been included because they
depend on factors, such as general economic conditions, the risks
outlined, and the success of these strategies, some of which are
outside the control of the Group.

Environmental regulation
The operations of the Group are not subject to any particular or
significant environmental regulations under a Commonwealth,
State or Territory law.

Indemnification and insurance of officers
The Group has paid insurance premiums for directors’ and officers’
liability for current and former directors and officers of the Company,
its subsidiaries and related entities.

The insurance policies prohibit disclosure of the nature of the liabil-
ities insured against and the amount of the premiums.

ASX Annual Report 2017 Directors’ report / 37

Rounding of amounts
ASX is a company of the kind referred to in ASIC Legislative Instr-
ument 2016/191. In accordance with that instrument, amou-
nts in the financial statements and the Directors’ Report
have been rounded to the nearest hundred thousand dollars,
unless otherwise indicated.

Signed in accordance with a resolution of the directors:

Rick Holliday-Smith
Chairman

Dominic J Stevens
Managing Director and Chief Executive Officer

Sydney, 17 August 2017

Directors’ report continued

The constitution of ASX provides that every person who is or has
been a director, secretary or executive officer of the Company,
and each other officer or former officer of the Company or of its
related bodies corporate as the directors in each case determine,
is indemnified by the Company to the maximum extent permitted
by law. The indemnity covers losses or liabilities incurred by the
person as a director or officer, including but not limited to liability
for negligence and for legal costs on a full indemnity basis.

Performance rights over issued shares
At the date of this report, ASX had 71,807 performance rights
outstanding (2016: 70,581). For further details on the performance
rights including performance hurdles for vesting, refer to the
Remuneration Report on pages 17 to 27.

During the year, 5,419 performance rights vested as a result of
partial attainment of hurdles under the September 2013 long-term
incentive plan.

Proceedings on behalf of the Group
No application for leave has been made under section 237 of the
Corporations Act 2001 in respect of the Group and no proceedings
have been brought or intervened in on behalf of the Group under
that section.

Remuneration report
Information on ASX’s remuneration framework and the outcomes
for FY17 for the ASX Limited Board and Key Management Personnel
(KMP), is included in the Remuneration Report on pages 17 to 27.

Non-audit services
Details of the amounts paid or payable to the Group's auditor
PricewaterhouseCoopers (PwC) and its related practices for non-au-
dit services provided during the year are set out in note E5.3 of the
financial statements on page 69.

Directors’ declaration of satisfaction with independence of auditor
The Board of directors has considered the non-audit services
provided during the year by the auditor and in accordance with writ-
ten advice provided by resolution of the Audit and Risk Committee, is
satisfied that the provision of those non-audit services is compatible
with, and did not compromise, the auditor independence require-
ments of the Corporations Act 2001 for the following reasons:

• non-audit services were subject to the corporate governance
procedures adopted by the Group and have been reviewed by
the Audit and Risk Committee

• non-audit services provided do not undermine the general

principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not
involve reviewing or auditing the auditor’s own work, acting in
a management or decision-making capacity for the Company,
acting as an advocate for the Company or jointly sharing risks
and rewards.

A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is on page 39.

/ ASX Annual Report 2017 Directors’ report

Auditor’s independence declaration

As lead auditor for the audit of ASX Limited for the year ended 30 June 2017, I declare that to the best of my knowledge and belief, there
have been:

a. no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b. no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of ASX Limited and the entities it controlled during the period.

Matthew Lunn
Partner

PricewaterhouseCoopers

Sydney, 17 August 2017

PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001

T: +61 2 8266 0000 F: +61 2 8266 9999 www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

ASX Annual Report 2017 Auditor’s independence declaration / 39

Statutory report – financial statements

Group disclosures
E1 Subsidiaries

E2 Deed of Cross Guarantee

E3 Related party transactions

E4 Parent entity financial information

E5 Other disclosures

E5.1 Commitments

E5.2 Share-based payments

E5.3 Auditor’s remuneration

E5.4 Other accounting policies

E5.5 Subsequent events

Directors’ declaration

Independent auditor’s report

Contents

Financial statements
Consolidated statement of
comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated statement of cash flows

Preface to the notes to the financial statements

Performance of the Group

A1 Segment reporting

A2 Dividends

A3 Capital management

A4 Earnings per share

A5 Taxation

Risk management
B1 Clearing risk

B2 Cash and cash equivalents

B3 Financial risk

Investments
C1 Available-for-sale investments

C2 Equity accounted investments

Other balance sheet assets and liabilities
D1 Receivables
D2 Intangible assets

D3 Property, plant and equipment

D4 Payables

D5 Provisions

/ ASX Annual Report 2017 Statutory report – financial statements

Consolidated statement of comprehensive
income

For the year ended 30 June
Revenue
Listings and Issuer Services
Derivatives and OTC Markets
Trading Services
Equity Post-Trade Services
Interest income
Dividend income
Share of net profit of equity accounted investments
Other

Expenses
Staff
Occupancy
Equipment
Administration
Finance costs
Depreciation and amortisation

Profit before income tax expense

Income tax expense

Net profit for the period attributable to owners of the Company

Other comprehensive income
Items that may be reclassified to profit or loss1:
Change in the fair value of available-for-sale financial assets
Change in the fair value of available-for-sale investments
Change in the fair value of cash flow hedges
Other comprehensive income for the period, net of tax

Total comprehensive income for the period attributable to owners of the Company

Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)

Note

D2, D3

A4
A4

2017
$m

194.8
269.4
197.1
104.4
150.5
13.9
0.1
1.9
932.1

(110.6)
(14.6)
(29.3)
(30.0)
(85.2)
(46.0)
(315.7)

616.4

(182.3)

434.1

(0.5)
39.6
(0.4)
38.7

472.8

224.5
224.5

2016
$m

194.3
266.2
183.8
102.0
146.3
13.1
0.9
1.7
908.3

(101.1)
(14.1)
(28.4)
(29.6)
(86.3)
(42.7)
(302.2)

606.1

(179.9)

426.2

(0.5)
15.8
(1.0)
14.3

440.5

220.4
220.4

1 $0.3 million (2016: $0.3 million) was reclassified from equity to profit or loss following the sale of available-for-sale financial assets prior to their maturity.

Foreign currency transactions are translated into AUD, being the currency of the primary economic environment in which the entity operates (the
functional currency), using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign
currencies, are recognised in profit or loss, except where they are deferred in equity as qualifying cash flow hedges (refer to note B3) and availa-
ble-for-sale investments in unlisted entities (refer to note C1).

Revenues and expenses are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST is not recoverable from
the taxation authority. In these circumstances the GST is recognised as part of the item of expense to which it relates.

ASX Annual Report 2017 Consolidated statement of comprehensive income / 41

Consolidated balance sheet

As at 30 June
Current assets
Cash and funds on deposit
Available-for-sale financial assets
Receivables
Prepayments
Total current assets

Non-current assets
Available-for-sale investments
Equity accounted investments
Intangible assets
Property, plant and equipment
Prepayments
Total non-current assets

Total assets

Current liabilities
Amounts owing to participants
Payables
Current tax liabilities
Provisions
Revenue received in advance
Total current liabilities

Non-current liabilities
Amounts owing to participants
Net deferred tax liabilities
Provisions
Revenue received in advance
Total non-current liabilities

Total liabilities

Net assets

Equity
Issued capital
Retained earnings
Restricted capital reserve
Asset revaluation reserve
Equity compensation reserve
Total equity

Note

2017
$m

2016
$m

B2
B2
D1

C1
C2
D2
D3

B1
D4

B1
A5
D5

5,683.8
3,401.8
1,124.9
16.6
10,227.1

431.1
66.7
2,439.2
46.6
1.0
2,984.6

3,276.4
3,796.4
469.1
12.6
7,554.5

358.2
66.6
2,420.7
51.6
-
2,897.1

13,211.7

10,451.6

7,884.7
1,092.4
16.3
15.8
18.2
9,027.4

200.0
69.3
6.8
0.1
276.2

9,303.6

3,908.1

3,027.2
622.2
71.5
178.4
8.8
3,908.1

5,888.2
437.8
9.9
14.5
16.4
6,366.8

200.0
51.6
9.0
0.1
260.7

6,627.5

3,824.1

3,027.2
576.9
71.5
139.7
8.8
3,824.1

Assets are recognised net of the amount of GST, except where the amount of GST is not recoverable from the taxation authority. In these circum-
stances the GST is recognised as part of the cost of acquisition of the asset. Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as a current asset or liability.

/ ASX Annual Report 2017 Consolidated balance sheet

Consolidated statement of changes in equity

For the year ended 30 June
Opening balance at 1 July 2016
Profit for the period
Other comprehensive income for
the period
Total comprehensive income for
the period, net of tax

Transactions with owners in their
capacity as owners:
Dividends paid
Closing balance at 30 June 2017

Opening balance 1 July 2015
Profit for the period
Other comprehensive income for
the period
Total comprehensive income for
the period, net of tax

Transactions with owners in their
capacity as owners:
Long-term incentive plan –
value of employee services
Dividends paid
Closing balance at 30 June 2016

Note

E5.2

Issued
capital
$m
3,027.2
-

-
3,027.2

3,027.2
-

-
3,027.2

Retained
earnings
$m
576.9
434.1

434.1

(388.8)
622.2

526.3
426.2

426.2

(375.6)
576.9

Restricted
capital
reserve
$m
71.5
-

Asset
revaluation
reserve
$m
139.7
-

Equity
compensation
reserve
$m
8.8
-

-
71.5

71.5
-

-
71.5

38.7

-
178.4

125.4
-

14.3

-
139.7

-
8.8

9.3
-

(0.5)

-
8.8

Total
equity
$m
3,824.1
434.1

38.7

472.8

(388.8)
3,908.1

3,759.7
426.2

14.3

440.5

(0.5)

(375.6)
3,824.1

ASX Annual Report 2017 Consolidated statement of changes in equity / 43

Consolidated statement of cash flows

For the year ended 30 June

Cash flows from operating activities
Receipts from customers

Payments to suppliers and employees

Interest received

Interest paid

Dividends received

Income taxes paid

Net cash inflow from operating activities

Cash flows from investing activities
Increase in participants’ margins and commitments

Payments for available-for-sale investments

Payments for other non-current assets

Net cash inflow from investing activities

Cash flows from financing activities
Dividends paid

Net cash (outflow) from financing activities

Net increase in cash and cash equivalents

(Decrease) in the fair value of cash and cash equivalents

(Decrease)/increase in cash and cash equivalents due to changes in foreign exchange rates

Cash and cash equivalents at the beginning of the financial period

Cash and cash equivalents at the end of the financial period

Cash and cash equivalents consists of:
ASX Group funds

Participants’ margins and commitments

Total cash and cash equivalents

Note

Reconciliation of the operating profit after income tax to the net cash flows from operating activities

Net profit after tax

Non-cash items:
Depreciation and amortisation

Share-based payments

Share of net profit of equity accounted investments

Tax on fair value adjustment of available-for-sale financial assets

Tax on fair value adjustment of cash flow hedges

Changes in operating assets and liabilities:
Increase/(decrease) in tax balances

(Increase) in receivables

(Increase) in prepayments

Increase/(decrease) in payables

Increase/(decrease) in revenue received in advance

(Decrease) in other current liabilities

(Decrease) in provisions

Net cash inflow from operating activities

2017
$m

835.4

(257.4)

578.0
150.4

(83.9)

13.9

(174.8)

483.6

2,018.9

(16.2)

(61.0)

1,941.7

(388.8)

2,036.5

(1.3)

(22.4)

7,072.8

9,085.6

1,000.9

8,084.7

9,085.6

2016
$m

801.2

(252.3)

548.9
148.0

(85.6)

13.1

(182.0)

442.4

2,146.4

(24.4)

(48.4)

2,073.6

(375.6)

2,140.4

(2.2)

55.6

4,879.0

7,072.8

984.6

6,088.2

7,072.8

434.1

426.2

46.0

(0.1)

0.2

7.1

(0.1)

(5.0)

0.3

1.8

(0.9)

483.6

42.7

(0.5)

(0.9)

0.2

0.4

(2.7)

(8.2)

(3.2)

(8.8)

(1.7)

(0.1)

(1.0)

442.4

Cash and cash equivalents includes all cash and funds on deposit and available-for-sale financial assets (refer to note B2). Cash flows are reported
on a gross basis and inclusive of GST. The GST components of cash flows arising from investing and financing activities which are recoverable from,
or payable to, the taxation authority are classified as operating cash flows.

/ ASX Annual Report 2017 Consolidated statement of cash flows

Preface to the notes to the financial
statements

ASX Limited (ASX or the Company) is a company limited by shares, incorporated and domiciled in Australia and is a for-profit entity for
the purposes of preparing the financial statements.

The financial statements for the consolidated entity which consists of ASX and its subsidiaries (together referred to as the Group) for the
year ended 30 June 2017 were authorised for issue by the Board of Directors on 17 August 2017. The directors have the power to amend
and reissue the financial statements.

The financial statements are general purpose financial statements that:

• have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other

authoritative pronouncements of the Australian Accounting Standards Board (AASB) and International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB)

• include the assets and liabilities of all subsidiaries of the Company as at 30 June 2017 and the results of the subsidiaries for the year

then ended. Inter-entity transactions with, or between, subsidiaries are eliminated in full on consolidation

• have been prepared on a historical cost basis, except for available-for-sale financial assets and investments which have been meas-

ured at fair value

• are measured and presented in Australian dollars which is ASX’s functional and presentation currency with all values rounded to the

nearest hundred thousand dollars unless otherwise stated, in accordance with ASIC Legislative Instrument 2016/191.

Significant accounting policies and key judgements and estimates are contained in shaded text and are included in the relevant note. These
policies have been consistently applied to all years presented, unless otherwise stated.

Key judgements and estimates
In the process of applying the Group’s accounting policies, Management has made a number of judgements and applied estimates concern-
ing future events.

Judgements and estimates that are material to the financial report are found in the following notes:

• C1 Available-for-sale investments

• C2 Equity accounted investments

• D2 Intangible assets.

Reclassification of prior year balances
Certain prior year amounts in the following notes to the financial statements have been reclassified to conform to current period presentations:

• B1 Clearing risk

• B3 Financial risk

• E2 Deed of Cross Guarantee.

ASX Annual Report 2017 Preface to the notes to the financial statements / 45

Performance of the Group

A1 Segment reporting

(a) Description of segment
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision-Maker
(CODM). The CODM, who is responsible for allocating resources
and assessing performance of the operating segments, has been
identified as the Managing Director and CEO.

The CODM assesses performance of the Group as a single segment,
being an integrated organisation that provides a multi-asset class
product offering which includes:

• listing and issuer services offered to public companies and

other issuers

• trading venue or exchange activities for trading

• clearing and settlement activities

• exchange-traded and over-the-counter (OTC) products

• information and technical services supporting the Group's

activities.

Multi-asset class service offerings include equities, interest rate,
commodity and energy products across cash and derivatives
markets.

In addition to reviewing performance based on statutory profit after
tax, the CODM assesses the performance of the Group based on
underlying profit after tax. This measure excludes amounts regarded
as significant items of revenue and expense such as those that may
be associated with significant business restructuring or individual
transactions of an infrequent nature. There were no items reported
as significant in the current or prior financial year.

Group performance measures, including earnings before inter-
est and tax (EBIT) and earnings before interest, tax, depreciation
and amortisation (EBITDA), are also reviewed by the CODM. In
assessing performance, doubtful debt provisions and arrangements
where revenue is shared with external parties are reclassified from
expenses to operating revenue; certain expenses are reclassified
within operating expenses; and interest income is presented net
of interest expense.

(b) Segment results
The information provided on a regular basis to the CODM, along with
a reconciliation to statutory profit after tax for the period attributa-
ble to owners of the Company, are presented on the following page.

ASX derives all external customer revenue within Australia and
some services are accessible offshore.

No single customer generates revenue greater than 10% of the
Group’s total revenue.

Revenue is measured at the fair value of the consideration received
or receivable, net of rebates. Revenue is recognised when it can be
reliably measured, and when it is probable that the economic benefits
will flow to the Group. Revenue is recognised for the major revenue
lines as described below.

• Listings and Issuer Services includes listing fees and other

issuer services revenue. Initial and subsequent listing fees are
recognised when the listing or subsequent event has taken
place. Annual listing fees are recognised over the financial year
to which they relate. Unamortised balances are recognised as
deferred revenue on the balance sheet. Issuer services revenue
includes revenue for the provision of holding statements and
other related activities, and is recognised in the period that the
service is provided.

• Derivatives and OTC Markets includes revenue from trading and
clearing of futures and equity options, and clearing of OTC inter-
est rate derivatives; settlement, depository and registry services
for debt securities and cash transactions (Austraclear); and ASX
Collateral services. Transaction revenue is recognised at trade
date except for Austraclear and ASX Collateral services where
revenue is recognised over the period the service is provided.
This may involve deferring a portion of the revenue to future
reporting periods.

• Trading Services includes revenue from cash market trading,
information and technical services. Cash market transaction
revenue is recognised at settlement date. The normal market
convention is that settlement occurs two days after the initial
trade date (T+2). Accordingly, revenue for trades transacted
in the last two days prior to period end are recognised in the
subsequent reporting period. Revenue in relation to information
and technical services is recognised over the period the service
is provided.

• Equity Post-Trade Services includes revenue from clearing and
settlement of quoted securities including equities, debt securi-
ties, warrants and exchange-traded funds. Cash market clear-
ing and settlement revenue is recognised at settlement date.
Accordingly, clearing and settlement fees for trades transacted
in the last two days prior to period end are recognised in the
subsequent reporting period.

Dividend income is recognised when the right to receive the dividend
has been established.

Interest income comprises interest earned on the Group’s own funds,
as well as interest earned from the investment of funds lodged by
participants as collateral. Interest income is recognised using the
effective interest rate method.

Interest expense is recognised as a finance cost in the statement
of comprehensive income using the effective interest rate method.

/ ASX Annual Report 2017 Performance of the Group

Performance of the Group continued

For the year ended 30 June

Revenue
Listings

Issuer Services

Listings and Issuer Services
Equity Options

Futures and OTC Clearing

Austraclear

Derivatives and OTC Markets
Cash Market Trading

Information Services

Technical Services

Trading Services
Cash Market Clearing

Cash Market Settlement

Equity Post-Trade Services

Other

Operating revenue
Interest income

Dividend income

Share of net profit of equity
accounted investments

Total revenue

Expenses
Staff

Occupancy

Equipment

Administration

Variable

ASIC supervision levy

Operating expenses

EBITDA
Finance costs

Depreciation and amortisation

Total expenses

EBIT

Net interest and dividend income
Net interest income

Net interest on participant
balances

Dividend income

Net interest and dividend income

Underlying profit before tax

Income tax expense

Underlying profit after tax

Significant items

Tax on significant items

Net profit after tax

2017

2016

Segment
information
$m

Adjustments
$m

Consolidated
income statement
$m

Segment
information
$m

Adjustments
$m

Consolidated
income statement
$m

150.3

42.4

192.7
21.7

197.4

50.0

269.1
46.3

82.5

67.2

196.0
53.3

51.1

104.4

1.9

764.1

(110.6)

(14.6)

(27.9)

(18.2)

(6.7)

(2.9)

(180.9)

583.2
-

(46.0)

537.2

17.8

47.5

13.9

79.2

616.4

(182.3)

434.1

2.1

2.1
0.2

0.1

0.3
-

1.1

1.1
-

150.5

13.9

0.1

168.0

(1.4)

(11.8)

6.7

2.9

(85.2)

(88.8)

(17.8)

(47.5)

(13.9)

(79.2)

152.4

42.4

194.8
21.9

197.4

50.1

269.4
46.3

82.5

68.3

197.1
53.3

51.1

104.4

1.9

150.5

13.9

0.1

932.1

(110.6)

(14.6)

(29.3)

(30.0)

(85.2)

(46.0)

(315.7)

616.4

(182.3)

434.1

149.4

43.3

192.7
23.1

194.3

48.4

265.8
40.7

80.1

62.0

182.8
54.1

47.9

102.0

3.0

746.3

(101.1)

(14.1)

(27.0)

(19.2)

(6.3)

(2.9)

(170.6)

575.7
-

(42.7)

533.0

22.3

37.7

13.1

73.1

606.1

(179.9)

426.2

434.1

426.2

1.6

1.6
-

0.3

0.1

0.4
-

1.0

1.0
-

(1.3)

146.3

13.1

0.9

162.0

(1.4)

(10.4)

6.3

2.9

(86.3)

(88.9)

(22.3)

(37.7)

(13.1)

(73.1)

151.0

43.3

194.3
23.1

194.6

48.5

266.2
40.7

80.1

63.0

183.8
54.1

47.9

102.0

1.7

146.3

13.1

0.9

908.3

(101.1)

(14.1)

(28.4)

(29.6)

(86.3)

(42.7)

(302.2)

606.1

(179.9)

426.2

ASX Annual Report 2017 Performance of the Group / 47

Performance of the Group continued

A2 Dividends

A3 Capital management

The Board's policy is to pay a dividend based on 90% of underlying
net profit after tax. This policy is unchanged from the prior year.

The following table includes information relating to dividends recog-
nised and paid by ASX during the financial year.

For the year ended 30 June 2017
Final dividend for the year ended
30 June 2016

Interim dividend for the year ended
30 June 2017

Total

For the year ended 30 June 2016
Final dividend for the year ended
30 June 2015

Interim dividend for the year ended
30 June 2016

Total

Cents per
share

Total amount
$m

99.0

102.0

201.0

95.1

99.1

194.2

191.7

197.5

389.2

184.1

191.9

376.0

The above dividends paid by the Company include amounts attached
to certain shares held by the Group's Long-Term Incentive Plan Trust
(LTIP). The dividend revenue recognised by LTIP of $0.4 million (2016:
$0.4 million) has been eliminated on consolidation.

Since the end of the financial year, the directors have determined
a final dividend of 99.8 cents per share totalling $193.2 million. The
dividend will be fully franked based on tax paid at 30%.

A liability is recognised for the amount of any dividends determined
on or before the balance date but not yet paid. Typically, the final
dividend in respect of a financial year is determined after balance
date, and therefore no provision is recognised.

Dividend franking account

Franking credits available for future
years at 30% adjusted for the
payment of current income tax

2017
$m

239.2

2016
$m

221.3

Adjusting for the payment of the final dividend for the year ended
30 June 2017, the franking balance would be $156.4 million (2016:
$139.2 million).

At 30 June 2017, equity of the Group totaled $3,908.1 million (2016:
$3,824.1 million). The Group’s capital supports a range of activities
and risks. Capital requirements are subject to change from time
to time. Some factors that may impact the amount of capital the
Group requires to support its business include:

• the level of goodwill recognised from business combinations.
This goodwill may be impacted by the performance of the
Group and subsequent impairment leading to a reduction in
capital

• regulatory standards, both domestic and international, which
may impact the level of capital supporting the clearing and
settlement activities or other licensed activities. Regulatory
standards applying to many financial market participants have
increased in recent years and there is an expectation that these
may increase further over time. There may also be uncertainty
over the application of new regulatory standards

• the competitive environment in which ASX operates may

lead to higher levels of capital in order to provide competitive
services, noting that customers may be able to access compet-
ing services internationally

• the level or concentration of activity undertaken in markets and
clearing and settlement facilities operated by ASX. Generally
a higher level of activity may result in higher capital require-
ments, however the relationship is not necessarily linear

• the general economic or credit conditions that may impact on
capital requirements as the level of risk generally increases as
credit conditions deteriorate. The level of operational risk capi-
tal held by the Group can be impacted by any revision to future
loss assessments and regulatory requirements

• the level of investments made, their fair value and the potential

movement in their market values. Capital requirements are
also impacted by ASX’s level of investment in existing or new
services. These investments are predominantly in intangible
software assets which may be subject to write-down under
certain circumstances.

The Board's policy is to maintain an appropriate level of capital
within the Group and relevant subsidiaries with the objectives of:

• meeting its compliance obligations with respect to the Financial
Stability Standards and other regulations, including interna-
tional regulations, as required by the various licences held

• sustaining prudential stability through maintaining an adequate
level of equity at the Group level, cognisant of the fact that a
significant allocation of capital supports the activities of the
two licensed central counterparty (CCP) clearing subsidiaries as
discussed in note B1 and the two licensed settlement facilities

• facilitating growth of the Group's exchange-traded and OTC
markets, and providing appropriate risk-adjusted returns to
shareholders.

In accordance with the Group's objectives and policies, capital
represented by cash is invested at an appropriate liquidity profile,
taking into consideration the potential claims on that equity that
may arise from the Group's activities, predominantly CCP clearing.

48 / ASX Annual Report 2017 Performance of the Group

Performance of the Group continued

(a) Ordinary share capital
Fully paid ordinary shares carry the right to participate in dividends.
Ordinary shares also entitle the holder to the proceeds on winding
up of the Company in proportion to the number of and amounts paid
on the shares held. Ordinary shares have no par value and ASX does
not have a limited amount of authorised capital. At 30 June 2017, all
ordinary shares issued were fully paid. On a show of hands, every
holder of ordinary shares present in person or by proxy, is entitled
to one vote and upon a poll each share is entitled to one vote.

As at 30 June 2017, the closing balance of ordinary share capital was
$3,027.2 million (2016: $3,027.2 million) and the number of shares
outstanding was 193,595,162 (2016: 193,595,162). There were no
movements in the balance of ordinary share capital or the number
of shares outstanding in the current or prior financial year.

Asset revaluation reserve
Changes in the fair value of financial assets including availa-
ble-for-sale assets and investments and assets designated as part
of cash flow hedging relationships, are taken to the asset revaluation
reserve. Amounts are recognised in profit or loss when the associ-
ated available-for-sale financial assets and investments are sold or
impaired or to the extent that the cash flow hedges are ineffective.

The movement in the asset revaluation reserve is primarily due to
the change in the market value of investments in listed and unlisted
entities (refer to note C1).

Equity compensation reserve
The equity compensation reserve is used to recognise the fair value
of performance rights issued under the ASX LTI plan.

Refer to the consolidated statement of changes in equity for details
of movements in the reserves.

A4 Earnings per share

Basic and diluted earnings
per share (cents)

Weighted average number of ordi-
nary shares used in calculating basic
and diluted earnings per share

2017

224.5

2016

220.4

193,415,430

193,413,893

The basic and diluted earnings per share (EPS) amounts have been
calculated on the basis of net profit after tax of $434.1 million
(2016: $426.2 million).

Basic EPS is calculated by dividing the consolidated profit attribut-
able to the owners of the Company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year, adjusted
for bonus elements in ordinary shares issued during the year and
excluding treasury shares.

Diluted EPS adjusts the figures used in the determination of basic EPS
to take into account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary shares,
and the weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all dilutive
potential ordinary shares.

Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity
as a deduction from the proceeds, net of tax.

Dividend reinvestment plan shares allotted to ASX shareholders as
part of the dividend reinvestment plan (DRP) at the DRP allocation
price are classified as fully paid ordinary shares.

(b) Treasury shares
The following table presents the movement in treasury shares
during the financial year:

Opening balance
Shares issued under the LTI

Shares transferred to LTIP

Closing balance

2017
No. of shares

2016
No. of shares

181,269
(5,419)

7,368

183,218

181,269
-

181,269

Treasury shares are shares in ASX held by the LTIP for the benefit of
employees under the ASX Long-Term Incentive (LTI) plan as described
in the remuneration report. The original purchase price of the shares,
net of any tax effect, is deducted from the equity compensation reserve
in equity.

Shares allocated to employees under the deferred short-term incentive
(DSTI) plan are held as treasury shares when forfeited until such time
that they are reallocated under another DSTI or LTI plan.

(c) Reserves
Restricted capital reserve
The restricted capital reserve was created when funds were
transferred from the National Guarantee Fund (NGF) to ASX Clear
Pty Ltd (ASX Clear) in 2005. Under the terms of the transfer, ASX
Clear must not, without first obtaining the consent in writing of
the Assistant Treasurer (the Minister), take action to use these
funds for a purpose other than clearing support.

ASX Annual Report 2017 Performance of the Group / 49

Performance of the Group continued

Income tax expense is recognised in profit or loss except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity respectively. Income tax
expense recognised in profit or loss comprises current and deferred
income tax.

Current tax is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous
years. Current tax assets and tax liabilities are offset if there is a legally
enforceable right to offset and the Group intends to either settle on a
net basis, or to realise the asset and settle the liability simultaneously.

Deferred income tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes,
and the amounts used for taxation purposes. Deferred income tax is
not recognised for certain temporary differences such as the initial
recognition of goodwill.

The amount of deferred income tax is determined using tax rates
enacted or substantively enacted at the balance sheet date and
expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.

A deferred tax asset is recognised only to the extent that it is prob-
able that future taxable amounts will be available against which the
asset can be utilised, and is reduced to the extent that it is no longer
probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforce-
able right to offset current tax liabilities and assets, and when the
deferred tax balances relate to income taxes levied by the same tax
authority.

Further information on the Group's tax obligations can be found in
the Tax Transparency Report available on ASX's website.

A5 Taxation

The movements during the year in the following components of
deferred tax asset and liability were recognised in profit or loss with
the exception of revaluations of available-for-sale financial assets,
available-for-sale investments and cash flow hedges, which were
recognised in other comprehensive income.

(a) Income tax expense
Profit before income tax expense
Prima facie income tax expense calculated
at 30% (2016: 30%) on the profit before tax

Movement in income tax expense due to:
Non-deductible items
Non-assessable items
Franking credit offset
Research and development tax offset
Adjustments to current tax for
prior periods
Total income tax expense

(b) Major components of income tax expense
Current tax expense

Movement in deferred tax liability
Movement in deferred tax asset
Adjustments to current tax for
prior periods
Total income tax expense

2017
$m

616.4

(184.9)

(0.2)
0.1
2.4
0.2

0.1

2016
$m

606.1

(181.8)

(0.4)
0.2
2.1
-

(182.3)

(179.9)

(181.2)

(178.8)

0.4
(1.6)

0.1

(0.1)
(1.0)

(182.3)

(179.9)

Revaluation of available-for-sale
financial assets

Revaluation of available-for-sale
investments
Revaluation of cash flow hedges
Total

(d) Deferred tax asset/(liability)

0.2

(17.0)

0.2
(16.6)

0.2

(6.8)

0.4
(6.2)

Deferred tax asset comprises the estimated future benefit at an income tax
rate of 30% (2016: 30%) of the below items:

Doubtful debts provisions
Employee entitlements provisions
Premises provisions
Accrued expenses
Revenue received in advance
Revaluation of cash flow hedges
Revaluation of available-for-sale
investments – unlisted entities
Deferred tax asset

0.3
9.8
2.0
1.0
3.7
0.3

0.5

17.6

0.3
10.5
2.6
1.6
3.6
0.2

0.3

19.1

Deferred tax (liability) comprises the estimated future expense at an income tax
rate of 30% (2016: 30%) of the following items:
Fixed assets
Revaluation of available-for-sale
financial assets
Revaluation of available-for-sale
investments – listed entities
Long-term incentive plan
Deferred tax (liability)

(0.3)
(86.9)

(77.2)

(0.2)

(9.2)

(0.3)
(70.7)

(60.0)

(10.0)

(0.4)

Net deferred tax (liability)

(69.3)

(51.6)

50 / ASX Annual Report 2017 Performance of the Group

Risk management

Some of the risks the Group is exposed to include clearing and settle-
ment risk and operational risk. ASX settles equity and debt instru-
ment transactions on a delivery-versus-payment basis. Settlement
errors expose the Group to potential financial and reputational
losses. Operational incidents or errors can impact on the financial
performance of the Group and adversely affect its reputation.

Current amounts owing to participants represent collateral lodged
to cover margin requirements on unsettled derivative contracts and
cash market trades. Non-current amounts owing to participants
represent cash balances deposited by participants as commitments
to clearing guarantee funds, which at reporting date had no deter-
mined repayment date.

B1 Clearing risk

The Group collects margins and other balances (commitments)
from clearing participants as security for clearing risk undertaken.

Sub-sections (a) and (b) below discuss participants’ obligations and
the nature of collateral and commitments lodged, as well as ASX’s
recognition principles concerning these liabilities.

(a) Novation
The Group has the following wholly owned subsidiaries that provide
CCP clearing services:

• ASX Clear Pty Limited (ASX Clear), which provides novation of

cash market securities and derivatives

• ASX Clear (Futures) Pty Limited (ASX Clear (Futures)),

which provides novation of both exchange-traded and OTC
derivatives.

Transactions between two clearing participant organisations are
novated to the CCPs. This makes the CCPs contractually responsible
for the obligations entered into by clearing participants on both the
buying and selling legs of the same transaction. Through novation,
the respective CCP assumes the credit risk of the underlying clear-
ing participant in the event of a participant default. The novation
process results in all positions held by the CCPs being matched.

(b) Participants’ margins
Clearing participants are required to lodge an amount (initial margin)
on open cash market and derivative positions novated to the Group’s
CCPs. These margins are based on risk parameters attached to
the underlying security or contract at trade date and may include
additional margins called on participants. The margin rates are
subject to regulatory standards including a high level of confidence
that they meet expected movements based on historical events.
However, there could be circumstances where losses are greater
than the margins held.

At 30 June, participants’ margins and commitments recognised on
balance sheet comprised the following:

Current
Cash lodged

Debt securities lodged

Total current amounts owing
to participants

Non-current
Commitments lodged as cash

Total non-current amounts owing
to participants

2017
$m

7,671.6

213.1

7,884.7

200.0

2016
$m

5,674.9

213.3

5,888.2

200.0

Total amounts owing to participants

8,084.7

6,088.2

Margins that are settled by cash or debt securities are recognised
on balance sheet at fair value and are classified as amounts owing
to participants within current liabilities. Balances lodged in cash are
interest bearing and are carried at the amounts deposited which
represent fair value. Margins that are settled by bank guarantees or
equity securities are not recognised on balance sheet as the Group is
not party to the contractual provisions of the instruments other than
in the event of a default.

In addition to the initial margin, participants must also settle
changes in the fair value of derivatives contracts (variation margin).
Participants must settle both initial and variation margins daily.
The amounts owing to participants are repayable on settlement
or closure of the contracts.

In the event of default by a clearing participant, ASX Clear and ASX
Clear (Futures) are required to provide funds or settle securities
of the defaulting participant. The CCPs also have the authority to
retain collateral and commitments deposited by the defaulting
clearing participant to satisfy its obligations. As at 30 June, collat-
eral and commitments lodged by clearing participants comprised
the following:

ASX Clear

ASX Clear (Futures)

2017
$m
672.3

2016
$m
815.7

14.6

3,398.3

3,385.7

2017
$m
7,199.3

2016
$m
5,059.2

213.1

213.3

Cash

Bank guarantees

Equity securities

Debt securities

All net delivery and net payment obligations relating to cash market
and derivative securities owing to or by participants as at 30 June
2017 were subsequently settled.

(c) Financial resources available to CCPs
The Financial Stability Standards require each CCP to have adequate
financial resources to cover its exposures in the event of default
by the two participants and their affiliates that would potentially
cause the largest aggregate credit exposure for the CCP in extreme
but plausible market conditions. Financial resources include the
clearing default funds shown in the next two tables as well as
eligible collateral and commitments. The level of clearing default
funds which the CCPs must maintain may therefore increase from
time to time. The Financial Stability Standards also require each CCP
to have a process for replenishing any clearing default funds after
depletion caused by a default loss. The replenished fund is then
available to support new activity post the loss. To comply with this
obligation, the Group has undertaken, in certain circumstances, to
provide funds up to pre-determined levels for replenishment of the
clearing default funds. The Group may utilise a number of alternative
funding sources to contribute to an increase in or replenishment of
the CCPs’ clearing default funds, including its own cash reserves.
In certain circumstances participants may have an obligation to
the CCP to contribute to an increase in or replenishment of the
clearing default funds.

ASX Annual Report 2017 Risk management /

Risk management continued

The CCPs’ operating rules also provide for the CCPs to undertake
certain actions to deal with events of default and utilisation of
collateral, commitments and clearing default funds. These include
the ability to call recovery assessments, impose payment reductions
or implement termination of positions.

ASX Clear

Restricted capital reserve

Equity provided by the Group

Paid-in resources
Recovery assessments

Total financial resources

2017
$m
71.5

178.5

250.0
300.0

550.0

2016
$m
71.5

178.5

250.0
300.0

550.0

The financial resources at 30 June 2017 available to ASX Clear in the
event of a participant default would be applied in the following order:

1. collateral, other margin or contributions lodged by the defaulting

participant

2. restricted capital reserve of $71.5 million

3. equity capital of $178.5 million

4. contributions lodged by non-defaulting participants under the
ASX Clear operating rules (no contributions were lodged in the
current or prior year)

5. recovery assessments of $300.0 million which can be levied on
participants (no amounts were levied in the current or prior year).

A participant may be either a futures or OTC participant or both. The
order of application with respect to items 3 and 5 above will depend
on the status of the defaulting participant. Where a participant
default is only a single category (ie futures or OTC), then the non-de-
faulting participants’ commitments from the same category are
utilised in item 3, with the other category utilised in item 5. Where
a defaulting participant is both a futures and OTC participant, the
other non-defaulting participants’ commitments are apportioned
for the purposes of 3 and 5.

B2 Cash and cash equivalents

The cash and funds on deposit and available-for-sale financial assets
represent total cash and cash equivalents as per the statement of
cash flows. The balance represents the Group’s own cash funds
as well as collateral and commitments lodged by participants in
accordance with note B1.

Cash at call

Reverse repurchase agreements

Deposits

Cash and funds on deposit

Money market instruments - at cost

Revaluation recognised in equity

Available-for-sale financial assets

Total cash and cash equivalents

2017
$m
504.3

4,958.5

221.0

5,683.8

3,401.3

0.5

3,401.8

9,085.6

2016
$m
1,711.5

1,069.9

495.0

3,276.4

3,795.1

1.3

3,796.4

7,072.8

ASX Clear (Futures)

Equity provided by the Group

Commitments lodged as cash

Equity provided by the Group

Commitments lodged as cash

Equity provided by the Group

Paid-in resources
Recovery assessments

Total financial resources

120.0

100.0

150.0

100.0

180.0

650.0
200.0

850.0

120.0

100.0

150.0

100.0

180.0

650.0
200.0

850.0

The cash and cash equivalents above includes $71.5 million of
restricted cash that is available for use by the entity in specific
circumstances as described in note A3(c) and is also recognised
as a restricted capital reserve within equity on the balance sheet.

Available-for-sale financial assets comprise short-term money
market investments, including negotiable certificates of deposit,
bonds, floating rate notes, promissory notes and treasury notes,
and are traded in active markets.

The financial resources at 30 June 2017 available to ASX Clear
(Futures) in the event of a participant default would be applied in
the following order:

1. collateral lodged by the defaulting participant

2. equity capital of $120.0 million

3. commitments lodged by participants, totalling $100.0 million.
Any defaulting participant’s commitments in this total will be
included in amounts previously applied as part of (1) above

4. equity capital of $150.0 million

5. commitments lodged by participants, totalling $100.0 million

6. equity capital of $180.0 million

7. recovery assessments of $200.0 million which can be levied on
participants (no amounts were levied in the current or prior year).

Reverse repurchase agreements are recognised within cash and
funds on deposit at the amount of the cash consideration paid. The
securities purchased under the agreement are not recognised on the
balance sheet as substantially all the risks and rewards of ownership
are retained by the counterparty to the agreement.

Available-for-sale-financial assets are initially recognised at fair value,
being the fair value of the consideration given plus transaction costs
that are directly attributable to acquiring the asset. After initial recogni-
tion, available-for-sale financial assets continue to be measured at fair
value as determined by valuation techniques outlined in note B3(d)(i).

Fair value gains or losses are recognised directly in the asset revaluation
reserve in equity until the asset is derecognised, at which time the
cumulative gain or loss previously recognised in equity is recognised
in profit or loss.

Impairment indicators for available-for-sale assets include a significant
or prolonged decline in the fair value of the security below its cost.
When the asset is considered to be impaired, any loss that had been
recognised directly in equity is transferred to profit or loss.

52 / ASX Annual Report 2017 Risk management

Risk management continued

B3 Financial risk

The Group’s activities expose it to a variety of financial risks including market risk (comprising interest rate, foreign currency and equity
price risk), credit risk and liquidity risk.

The Group’s overall risk management strategy seeks to manage potential adverse effects on the financial performance of the Group.
Risk management is carried out under policies approved by the Board of Directors. Management monitors investment credit, foreign
currency, liquidity and cash flow interest rate risk, and manages clearing default credit risk with counterparties with ongoing reporting
to the respective boards.

The Group holds the following financial assets and liabilities by category:

As at 30 June

Financial assets
Cash and funds on deposit

Available-for-sale financial assets

Receivables

Available-for-sale investments

Total financial assets

Financial liabilities
Payables

Amounts owing to participants

Total financial liabilities

Note

2017

2016

Available-
for-sale
$m

Amortised
cost
$m

Total
$m

Available-
for-sale
$m

Amortised
cost
$m

Total
$m

3,276.4

3,796.4

469.1

358.2

5,683.8

3,401.8

431.1

1,124.9

5,683.8

3,401.8

1,124.9

431.1

3,832.9

6,808.7

10,641.6

3,276.4

469.1

3,796.4

358.2

4,154.6

3,745.5

7,900.1

1,085.7

8,084.7

9,170.4

1,085.7

8,084.7

9,170.4

431.2

6,088.2

6,519.4

431.2

6,088.2

6,519.4

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets as detailed
in the previous table.

(a) Market risk
Market risk is the risk of loss arising from movements in observable market variables such as interest rates, foreign exchange rates and
other market prices.

(i) Interest rate risk

Exposure arising from
Variable rate cash investments and money market instruments
expose the Group to cash flow interest rate risk.

Risk management
• The Boards of the relevant subsidiaries have set limits with respect to maxi-

mum and weighted average maturity and value at risk.

• Managed by policies that enable the Group to pay a variable rate of interest to

participants on the funds held.

Fixed rate money market instruments that are carried at fair value
expose the Group to fair value interest rate risk.

• The Boards of the relevant subsidiaries have set limits with respect to maxi-

mum and weighted average maturity and value at risk.

Interest bearing assets comprise the investment of the Group’s cash resources (participant collateral lodged in cash and Group funds).
Interest bearing liabilities comprise collateral and commitment funds lodged by participants.

The Group’s receivables, available-for-sale investments and payables are non-interest bearing so are therefore not subject to interest rate
risk, since neither the carrying amount nor the future cash flows will fluctuate due to a change in market interest rates.

ASX Annual Report 2017 Risk management /

Risk management continued

The following table presents the Group’s interest bearing financial assets and liabilities at 30 June.

As at 30 June

Interest bearing financial assets
Cash and funds on deposit

Available-for-sale financial assets

Total interest bearing financial assets
Weighted average interest rate at period end

Interest bearing financial liabilities
Amounts owing to participants

Total interest bearing financial liabilities
Weighted average interest rate at period end

Floating
interest
rate
$m

504.3

267.8

772.1
1.20%

8,084.7

8,084.7
1.06%

2017

Fixed
interest
rate
$m

5,179.5

2,920.9

8,100.4
1.78%

Total
$m

5,683.8

3,188.7

8,872.5

8,084.7

2016

Fixed
interest
rate
$m

1,565.0

2,570.2

4,135.2
2.31%

Total
$m

3,276.4

3,583.1

6,859.5

6,088.2

Floating
interest
rate
$m

1,711.4

1,012.9

2,724.3
1.97%

6,088.2

6,088.2
1.23%

Net interest bearing financial (liabilities)/assets

(7,312.6)

8,100.4

787.8

(3,363.9)

4,135.2

771.3

With respect to the prior table:

• floating interest rate refers to financial instruments where the interest rate is subject to change prior to maturity or repayment –

predominantly deposits at call and floating rate notes

• fixed interest rate refers to financial instruments where the interest rate is fixed up to maturity – predominantly term deposits, negotiable

certificates of deposit, promissory notes, treasury notes, reverse repurchase agreements and bonds.

Sensitivity analysis (net of tax)
Changes in interest rates affect the Group's profit or loss due to higher/lower interest income earned on its cash and available-for-sale
financial assets while equity is affected due to the change in fair values of available-for-sale financial assets. As the Group does not account
for any interest bearing financial assets or liabilities at fair value through profit or loss, any changes in fair value resulting from a change
in interest rates would only affect profit or loss if a subsequent disposal was made prior to maturity.

An analysis of this sensitivity and its impact on the Group's profit or loss and equity net of tax for the year is provided in the table below.
The analysis is based on a hypothetical 25 basis point change in interest rates at 30 June and has been applied to the interest rate risk
exposures that exist at that date. All other variables have been held constant.

+25 basis point change in interest rates

-25 basis point change in interest rates

(ii) Foreign currency risk

2017

2016

Impact on profit
$m
(0.7)

Impact on equity
$m
(1.3)

Impact on profit
$m
0.4

Impact on equity
$m
(1.1)

0.7

1.3

(0.4)

1.1

Exposure arising from
Cash flow commitments in foreign currencies entered into by the
Group.

Collateral on clearing participants’ derivatives exposures lodged in
foreign currency and held by the Group's CCPs.

Risk management
• Where the Group enters into cash flow commitments in foreign currencies,

its policy is to enter into hedging arrangements to mitigate the exchange risk
where possible.

• The collateral held in foreign currency is offset by an equal payable in the same
currency to the participant, which reduces foreign currency risk in the normal
course of business.

The majority of the Group’s net foreign currency risk is associated with foreign denominated cash, net interest income and exchange fees
receivable. Such exposure however, is not considered significant and is converted to AUD on a regular basis.

At 30 June 2017, USD 12.4 million (2016: USD 24.0 million) was designated by the Group as the hedging instrument in qualifying cash flow
hedges for committed expenditure to be paid in USD. In the prior year, there was EUR 5.6 million designated at 30 June by the Group as
the hedging instrument in qualifying cash flow hedges for committed expenditure to be paid in EUR. These amounts are included in the
following table within cash and funds on deposit. During the current financial year, the use of cash flow hedges resulted in a $0.3 million
increase in cash flow required for committed capital and operating expenses (2016: reduction of $1.2 million).

Available-for-sale investments denominated in USD are subject to foreign currency risk, impacting their carrying value.

54 / ASX Annual Report 2017 Risk management

Risk management continued

The table below shows the Group’s exposure on its balance sheet to foreign currency risk at the end of the year, expressed in AUD.

As at 30 June

Financial assets
Cash and funds on deposit

Receivables

Available-for-sale investments

Financial liabilities
Payables

Amounts owing to participants

Net exposure

NZD
$m

143.6

0.5

0.2

143.2

0.7

2017

USD
$m

17.6

22.7

1.3

39.0

EUR
$m

1.5

Exchange rate for conversion AUD 1:

1.0524

0.7683

0.6716

JPY
$m

173.4

0.1

172.9

0.6

86.19

NZD
$m

125.8

0.7

0.2

125.2

1.1

2016

USD
$m

33.1

23.3

EUR
$m

JPY
$m

8.3

253.0

252.8

0.2

76.73

56.4

8.3

1.0489

0.7458

0.6711

Sensitivity analysis (net of tax)
Changes in exchange rates affect the Group's profit or loss due to the gain/loss recognised on translation of foreign currency denominated
financial assets and liabilities at balance date. Equity is affected due to USD and EUR foreign currency cash flow commitments designated
as cash flow hedges and the valuation of the investment in an unlisted entity.

An analysis of this sensitivity and its impact on the Group's profit or loss and equity net of tax for the year is provided in the table below.
The analysis is based on a hypothetical 10% change in the market exchange rate of the AUD against other currencies at 30 June and has
been applied to the foreign currency risk exposures that exist at that date. All other variables, including interest rates, have been held
constant. The impact is expressed in AUD.

+10% strengthening of AUD

-10% weakening of AUD

2017

Impact on
equity

2016

Impact on
profit

Impact on
equity

USD
$m
(2.5)

2.5

NZD
$m
0.1

(0.1)

USD
$m
(3.6)

3.6

EUR
$m
(0.5)

0.5

At the inception of the hedging transaction, the Group documents the relationship between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception
and also on an ongoing basis, of whether the instruments that are used in hedging transactions have been, and will continue to be highly effective
in offsetting changes in cash flows of hedged items.
% strengthening/weakening of the AUD against the JPY would have had an immaterial impact on the Group's profit or loss in both current
and prior financial years.

For cash flow hedges, the effective portion of any change in the fair value of the instrument that is designated and that qualifies as a cash flow hedge
is recognised in the asset revaluation reserve in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

(iii) Price risk

Exposure arising from
Equity securities price movements with respect to the Group’s
investments in listed entities of $408.4 million (2016: $334.9 million).

Risk management
• Ongoing monitoring of values with respect to any impairment, with considera-

tion given to financial and other implications of holding the instruments.

Other price movements associated with underlying equities and
derivatives on trades novated to the CCPs.

• Under normal circumstances, this risk is minimal as the trades are matched.
However price movements may impact on credit risk associated with partici-
pant obligations (as discussed in the following section).

Sensitivity analysis (net of tax)
Changes in quoted market prices affect the Group's equity due to the change in fair value of the Group's listed equity investment (refer to
note C1). As the Group does not account for any equity investments at fair value through profit or loss, any change in fair value resulting
from a change in price would only affect profit or loss if the investment was subsequently sold.

If the price of the listed equity investment increased/decreased by 10% at 30 June 2017, with all other variables held constant, equity
would have increased/decreased by $28.6 million (2016: $23.4 million), net of tax.

ASX Annual Report 2017 Risk management /

Risk management continued

(b) Credit risk

Exposure arising from
Through the novation process, the Group is exposed to the potential
loss that may arise from the failure of a counterparty to meet its
obligations or commitments. The obligations mainly relate to T+2
settlement risk for cash market trades and daily mark-to-market
movements on open derivative positions. Failure of clearing partic-
ipants to meet these obligations exposes the Group to potential
losses.

Risk management
• Clearing participant membership requirements and admission standards,

including minimum capital requirements.

• Participant surveillance, including capital monitoring.
• Daily and intraday counterparty credit risk control, including margining and

collateral management.

• Position limits based on the capital of the participant.
• Financial resource adequacy, including fixed capital and stress-testing of clear-
ing participants’ exposure limits against the amount and liquidity of variable
and fixed financial resources available.

• Operating rules that deal with recovery and resolution of losses in the event of

a clearing participant default. Refer to note B1(c).

Investment counterparty credit risk arises on certain financial assets
including cash, funds on deposit, available-for-sale financial assets,
and trade and other receivables.

• Board policies that limit the amount of credit exposure and concentration to
any one counterparty, as well as minimum credit ratings for counterparties.
Investments are limited to non-derivative assets.

• Recovery rules that address the allocation of losses between the Group and

clearing participants.

• Active debt collection procedures and regular review of trade receivables ageing.

The Group’s ongoing monitoring of participants’ market positions and exposures, coupled with daily margining and collateral management,
including possible intraday and additional margin calls, enable it to manage its central counterparty credit risk and meet its regulatory
obligations. Further information on the resources available to the CCPs in the event of a participant default is shown in note B1.

Standard & Poor’s (S&P) credit ratings are used in determining the credit quality of the counterparty with whom cash and funds on deposit,
and current available-for-sale financial assets are held. Counterparties are limited to the Commonwealth of Australia, Australian state
governments and banks with a minimum short-term credit rating of A2.

The Group’s largest single counterparty exposure at the end of the reporting period was $1,886.2 million (2016: $1,007.1 million) to an
Australian licensed bank with an S&P short-term credit rating of A1+. The majority of this exposure was secured against Commonwealth
Government securities. The risk ratings of the counterparties that the Group has exposure to at the end of the period are shown in the
following table.

As at 30 June
Cash at call
Reverse repurchase agreements1
Deposits

Total cash and funds on deposit
Negotiable certificates of deposit

Promissory notes

Treasury notes

Floating rate notes

Bonds

A1+
$m
323.3

3,770.4

25.0

4,118.7
172.4

1,926.2

265.8

842.4

Total available-for-sale financial assets

3,206.8

195.0

2017

A1
$m
180.9

A2
$m
0.1

Total
$m
504.3

A1+
$m
1,547.6

2016

A1
$m
163.9

Total
$m
1,711.5

1,188.1

4,958.5

1,069.9

196.0

376.9
193.0

2.0

1,188.2
-

221.0

5,683.8
365.4

1,926.2

267.8

842.4

25.0

2,642.5
624.1

1,123.1

114.8

797.1

366.1

470.0

633.9
555.4

495.0

3,276.4
1,179.5

1,123.1

114.8

215.8

1,012.9

366.1

3,401.8

3,025.2

771.2

3,796.4

1 Reverse repurchase agreements are collateralised by Commonwealth or Australian state government securities.

The Group does not utilise credit ratings to determine the credit quality of other financial assets, which includes trade receivables, margins
receivable from participants, accrued revenue, interest receivable and available-for-sale investments. Intercompany receivables consist
of balances owing between the entities of the Group and are eliminated on consolidation. The parent entity considers the credit risk on
these balances to be low.

Exposure arising from
Margins to cover derivatives and cash market exposures are settled
with participants and invested in the short-term money market on a
daily basis. The investment of these balances requires strict manage-
ment to provide sufficient liquidity for the routine daily margin
settlement.

Risk management
• The Board has implemented policies that specify liquidity requirements, based

on whether assets can be liquidated and converted to cash on a same-day basis,
including maximum average maturity limits. Instruments that are eligible for
repurchase agreements with the Reserve Bank of Australia are treated as liquid.

• Forward planning and forecasting of liquidity requirements.

The expected undiscounted contractual cash flows of the Group's financial assets and liabilities are shown in the following table. All
available-for-sale financial assets are eligible for repurchase in the secondary market. All financial assets and liabilities are non-derivative.

The values on the balance sheet may differ to the assets and liabilities in the following table due to the difference in fair value at balance
date compared to the contractual cash flows up to maturity.

56 / ASX Annual Report 2017 Risk management

Risk management continued

As at 30 June 2017

Financial assets
Cash and funds on deposit

Available-for-sale financial assets

Receivables

Available-for-sale investments

Total financial assets

Financial liabilities
Payables

Amounts owing to participants

Total financial liabilities

Commitments
Capital and operating commitments

Operating lease commitments

Total commitments

As at 30 June 2016

Financial assets
Cash and funds on deposit

Available-for-sale financial assets

Receivables

Available-for-sale investments

Total financial assets

Financial liabilities
Payables

Amounts owing to participants

Total financial liabilities

Commitments
Capital and operating commitments

Operating lease commitments

Total commitments

Up to
1 month
$m

>1 month
to 3 months
$m

>3 months
to 1 year
$m

>1 year
$m

No specific
maturity
$m

2,651.7

728.6

1,123.3

2,971.0

1,241.5

1.5

72.4

1,448.8

0.1

4,503.6

4,214.0

1,521.3

1,076.6

7,884.7

8,961.3

0.3

0.8

1.1

4.5

2.0

1.5

3.5

2.6

18.4

5.8

24.2

2,447.1

882.0

467.1

788.2

1,573.0

2.0

45.4

1,359.7

3,796.2

2,363.2

1,405.1

406.0

5,888.2

6,294.2

0.7

0.8

1.5

17.8

2.2

1.6

3.8

1.2

15.0

7.6

22.6

1.0

46.5

68.0

114.5

6.2

50.9

76.2

127.1

431.1

1.0

200.0

201.0

358.2

200.0

Total
$m

5,695.1

3,418.9

1,124.9

431.1

10,670.0

1,085.7

8,084.7

9,170.4

67.2

76.1

143.3

3,280.7

3,814.7

469.1

358.2

7,922.7

431.2

6,088.2

6,519.4

68.8

86.2

155.0

With respect to amounts owing to participants, the actual maturity cannot be determined as maturity will depend on a number of factors
including new contracts opened and contracts closed by participants. These have been classified as having maturities up to one month
on the basis of the shortest possible legal obligation for repayments.

(d) Fair value measurements
(i) Fair value hierarchy and valuation techniques
The following table presents the Group’s financial assets measured and recognised at fair value at 30 June. The Group does not have any
financial liabilities measured at fair value.

As at 30 June

Financial assets
Available-for-sale financial assets:

- Negotiable certificates of deposit

- Promissory notes

- Treasury notes

- Floating rate notes

- Bonds

Available-for-sale investments

Total financial assets

2017

2016

Level 1
$m

Level 2
$m

Level 3
$m

Total
$m

Level 1
$m

Level 2
$m

Level 3
$m

Total
$m

192.2

408.4

600.6

365.4

1,926.2

267.8

650.2

3,209.6

22.7

365.4

1,926.2

267.8

842.4

431.1

3,832.9

213.3

334.9

548.2

1,179.5

1,123.1

114.8

1,012.9

152.8

3,583.1

23.3

1,179.5

1,123.1

114.8

1,012.9

366.1

358.2

4,154.6

ASX Annual Report 2017 Risk management /

Risk management continued

There were no transfers between levels for recurring measurements
during the year. The Group did not measure any financial assets at
fair value on a non-recurring basis as at 30 June 2017.

There were no gains or losses recognised in profit or loss in the
current or prior year.

A change in the unobservable inputs used to determine the fair
value of the unlisted equity investment would not have a material
impact on the financial statements.

(e) Enforceable netting arrangements
There are no financial assets and financial liabilities recognised on a
net basis. In the event that a clearing participant defaults and ASX
assumes open positions under novation, ASX’s policy is to recognise
the net open positions where it has the right to offset exposures.

In the event that a clearing participant defaults, ASX may utilise
collateral and commitments lodged by that participant to offset
net losses realised from the close-out of positions. While ASX has
the right to offset this collateral from the open position, its policy
is to only offset following the close-out. The aggregate amount of
collateral and commitments lodged by participants at 30 June 2017
was $8,084.7 million (2016: $6,088.2 million).

The classification of financial instruments within the fair value
hierarchy and the valuation techniques used to determine their
values are detailed below.

Level 1
Level 1 inputs are unadjusted quoted prices in active markets at
the measurement date for identical assets and liabilities. Financial
instruments included in this category are the Group's listed equity
investment and Australian Government bonds. The fair value of the
listed investment is determined by reference to the ASX-quoted
closing price at reporting date and the fair value of Australian
Government bonds are determined by reference to readily observ-
able quoted prices for identical assets in active markets.

Level 2
Level 2 inputs are inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices). All current availa-
ble-for-sale financial assets other than Australian Government
bonds as noted above are classified as Level 2 financial instruments
as their fair values are determined using discounted cash flow
models or observable market prices for identical assets that are
not actively traded.

Level 3
Level 3 inputs are based on unobservable market data. The fair
value of the Group's unlisted equity investment is determined using
a discounted cash flow model which includes unobservable inputs
and therefore is classified as a Level 3 instrument.

(ii) Fair values of other financial instruments
The Group has a number of financial instruments which are not meas-
ured at fair value on the balance sheet. Due to their short-term nature,
the carrying amounts of current receivables, current payables and
current amounts owing to participants are assumed to approximate
their fair value. The carrying amount of non-current amounts owing to
participants approximates their fair value as the impact of discounting
is not significant.

(iii) Level 3 fair value instruments
The following table presents the changes in Level 3 fair value instru-
ments during the year:

Opening balance at 1 July
Additions

FX revaluation loss:
- Recognised in equity1
- Recognised in deferred tax

Closing balance at 30 June

2017
$m

23.3
-

(0.4)

(0.2)

22.7

2016
$m

-
24.4

(0.8)

(0.3)

23.3

1 The loss, net of tax, recognised as a result of changes in foreign exchange
rates has been recognised within the asset revaluation reserve.

58 / ASX Annual Report 2017 Risk management

Investments

C1 Available-for-sale investments

C2 Equity accounted investments

Investments in listed entities

Investments in unlisted entities

Total available-for-sale investments

2017
$m
408.4

22.7

431.1

2016
$m
334.9

23.3

358.2

As at 30 June 2017, ASX held a 49.0% (2016: 49.0%) interest in an
associate entity, Yieldbroker Pty Limited (Yieldbroker). Yieldbroker’s
principal place of business is Australia. It operates licensed electronic
markets for trading Australian and New Zealand debt securities and
interest rate derivatives.

(a) Investments in listed entities
As at 30 June 2017, ASX held 18.8% (2016: 19.1%) of the share capital
in IRESS Limited (IRESS), whose principal activities consist of the
provision of financial planning and associated tools, in addition to
an equity information and trading platform for financial market and
wealth management participants.

During the year, ASX purchased 1,429,639 shares in IRESS as part
of the IRESS placement offer. The total purchase cost of the share
capital was $16.2 million. ASX did not purchase any share capital
in IRESS in the prior year.

The Group does not have significant influence over the investee as it
has no representation on the Board of directors and does not have
the power to participate in financial and operating policy decisions.

There was no impairment in investments in listed entities during
the current or prior financial year.

(b) Investments in unlisted entities
As at 30 June 2017, ASX held 8.5% (2016: 8.5%) equity interest in
Digital Asset Holdings LLC (DAH), which specialises in the develop-
ment of distributed ledger technology solutions.

Available-for-sale-investments are initially recognised at fair value,
being the consideration given plus transaction costs that are directly
attributable to acquiring the asset. After initial recognition, they
continue to be measured at fair value.

The fair value of investments in listed entities is determined by refer-
ence to quoted market prices at the close of business on the balance
sheet date. Refer to note B3(d)(i).

The fair value of investments in unlisted entities is determined by
reference to unobservable market data at balance date. Refer to
note B3(d)(iii).

The carrying amount of equity accounted investments was $66.7
million (2016: $66.6 million). There was no impairment charge
incurred in the current or prior year.

The financial information below represents ASX's 49.0% share of
Yieldbroker for the years ended 30 June 2017 and 2016:

Profit from continuing operations

Other comprehensive income

Total comprehensive income

2017
$m
0.1

0.1

2016
$m
0.9

0.9

Equity accounted investments are initially recognised at cost. The
carrying amount is subsequently adjusted to recognise the Group’s
share of the investee’s post-acquisition profit and loss and other
comprehensive income. This is recognised in the Group’s profit and
loss and comprehensive income respectively. Dividends received or
receivable from associates are recognised as a reduction in the carrying
amount of the investment.

The carrying amount of equity accounted investments is tested for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Where the recov-
erable amount is less than the carrying amount, an impairment loss is
recognised as an expense in the statement of comprehensive income.
The recoverable amount is the higher of the assets' fair value less
costs of disposal and value in use, and is assessed at the end of each
reporting period.

ASX Annual Report 2017 Investments / 59

Other balance sheet assets and liabilities

(a) Impaired trade receivables
As at 30 June 2017, the Group provided $0.8 million (2016: $1.1
million) for trade receivables that were identified as being impaired.
The individually impaired receivables relate to companies that are
in administration, entities with prolonged suspension from the
ASX official list of listed companies, and debts that remain unpaid
for a prolonged period despite active debt collection procedures.

The movements in the provision for impairment of trade receivables
are as follows:

Opening balance at 1 July
Provision for impairment
recognised during the year

Receivables written-off during the
year as uncollectable

Provisions subsequently reversed

Closing balance at 30 June

2017
$m

(1.1)

(0.9)

0.4

0.8

(0.8)

2016
$m

(1.6)

(0.6)

0.2

0.9

(1.1)

(b) Past due but not impaired
As at 30 June 2017, $4.7 million (2016: $7.0 million) of trade receiv-
ables were past due but not impaired. These balances relate to a
number of individual customers with whom the Group expects to
recover the debts.

The other classes within receivables do not include any amounts
that are past due and are not impaired. Based on the credit history
of these classes, it is expected that these amounts will be received
when due.

D1 Receivables

Current
Trade receivables

Less: provision for impairment

Margins receivable

Accrued revenue

Interest receivable

Other debtors

Total receivables

2017
$m

92.8

(0.8)

92.0
1,021.6

6.1

5.1

0.1

1,124.9

2016
$m

93.7

(1.1)

92.6
365.9

4.3

5.0

1.3

469.1

Trade receivables aged analysis
As at 30 June, the aged analysis for trade receivables of the Group
was as follows:

Not past due

Past due 0-30 days

Past due 31-60 days

Past due 61-90 days

Past due 91 days and over

Trade receivables not impaired
Trade receivables impaired

Total trade receivables

87.3

0.9

3.1

0.4

0.3

92.0
0.8

92.8

85.6

0.5

4.4

1.9

0.2

92.6
1.1

93.7

Trade receivables, which generally have terms of 30 days, are initially
recognised at fair value and subsequently measured at amortised
cost, less any provision for impairment.

The collectability of trade receivables is reviewed on a regular basis.
Debts known to be uncollectable are written-off by reducing the
carrying amount directly. A provision is raised when there is objective
evidence that the Group will not be able to collect all of the original
amounts due. The amount of the provision is the difference between
the asset’s carrying amount and the present value of the estimated
future cash flows. Impairment losses are recognised in the statement
of comprehensive income in administration expenses.

Margins receivable represents collateral receivable from clearing
participants on cash markets and derivative positions held at the end
of the day, and are received on the next business day. The amounts
include the movement in the fair value of derivative positions and are
recognised on trade date.

/ ASX Annual Report 2017 Other balance sheet assets and liabilities

Other balance sheet assets and liabilities continued

D2 Intangible assets

The movements in the intangible asset balances are as follows:

Cost

Accumulated amortisation
and impairment

Net book value at 1 July
Additions

Amortisation expense

Write-downs

Net book value at 30 June
Cost

Accumulated amortisation
and impairment

Net book value at 30 June

Software
$m
321.6

(218.5)

103.1
41.8

(28.6)

(3.7)

112.6
359.7

(247.1)

112.6

2017

Customer
lists
$m
-

Trade-
marks
$m
-

Goodwill
$m
2,317.6

Total
$m
2,639.2

Software
$m
282.4

(218.5)

(190.0)

2,317.6
-

2,317.6
2,317.6

2,420.7
50.9

(28.7)

(3.7)

2,439.2
2,686.4

92.4
40.1

(28.5)

(0.9)

103.1
321.6

(247.2)

(218.5)

-
1.2

(0.1)

1.1
1.2

(0.1)

1.1

2,317.6

2,439.2

103.1

-
7.9

7.9
7.9

7.9

2016

Customer
lists
$m
-

Trade-
marks
$m
-

-
-

Goodwill
$m
2,317.6

Total
$m
2,600.0

(190.0)

2,317.6
-

2,317.6
2,317.6

2,410.0
40.1

(28.5)

(0.9)

2,420.7
2,639.2

(218.5)

2,317.6

2,420.7

(a) Software
The write-down expense recognised in the current and prior financial
year relates to certain software intangible assets that were identi-
fied as having no future economic benefit to the Group. Impairment
charges were recognised within depreciation and amortisation in
the statement of comprehensive income.

Costs incurred in developing products or systems, and acquiring
software and licences that will contribute to future benefits, are
capitalised at cost and amortised on a straight-line basis over their
expected useful lives, from the time the assets are in use. Certain
staff costs are capitalised when they can be specifically attributed
to major software development projects. Software purchased from
external vendors is classified as externally acquired and may include
capitalised staff costs that have been incurred in the implementation
of the software.

Software is subject to amortisation and is reviewed for indicators
of impairment at the end of each reporting period or when events
or changes in circumstances have arisen that indicate the carry-
ing value may be impaired. Where the recoverable amount is less
than the carrying amount, an impairment loss is recognised as an
expense in the statement of comprehensive income. The recoverable
amount is the higher of an asset’s fair value less costs of disposal
and value-in-use. Determining whether the intangibles are impaired
requires an estimation of their useful lives, residual values and
amortisation method. The effect of any changes will be recognised
on a prospective basis.

The estimated useful lives of significant computer software systems
is as follows:

Cash market and derivative trading systems

Cash market clearing system

Derivative and OTC clearing systems

Debt depository system

5 years

10 years

(b) Trademarks and customer lists
There was no write-down or impairment expense recognised during
the year for trademarks or customer lists.

Trademarks and customer lists have been externally acquired and
are measured at cost. Customer lists are amortised on a straight-line
basis over their estimated useful life of five years while the registered
trademark has an indefinite useful life and is not amortised. The
trademark is assessed for impairment at each reporting date or when
there are indicators of impairment.

(i) Impairment test for goodwill
The Group consists of two cash generating units (CGUs), namely
exchange-traded and non exchange-traded. The goodwill attribut-
able to each CGU at the time of acquisition is as follows:

• exchange-traded: $2,242.2 million

• non exchange-traded: $75.4 million.

No impairment charge arose in the current or prior financial year.

(ii) Key assumptions used for value-in-use calculations
Management has determined the budgeted operating results based
on past performance and expectations for the future. The growth
rates used for revenue and expense projections are consistent with,
or lower than, historical trends for the CGUs.

The pre-tax discount rate used is 9.25% (2016: 9.5%) for all CGUs.
The growth rate used to extrapolate cash flow projections beyond
five years is 3.5% (2016: 3.5%) per annum for the exchange-traded
CGU and 3.5% (2016: 3.5%) per annum for the non exchange-traded
CGU. These calculations support the carrying value of goodwill.

ASX Annual Report 2017 Other balance sheet assets and liabilities / 61

Other balance sheet assets and liabilities continued

Goodwill on acquisition is initially measured at cost, being the excess of the consideration paid over the acquirer's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities of the acquiree. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.

Goodwill has an indefinite useful life and as such is not subject to amortisation and is tested semi-annually for impairment, or more frequently if
events or changes in circumstances indicate that they might be impaired. For the purpose of assessing impairment, assets are grouped at the lowest
levels for which they are separately identifiable cash flows (CGUs) and goodwill is allocated to each of the Group's CGUs that are expected to benefit
from the business combination in which the goodwill arose.

Where the recoverable amount is less than the carrying amount, an impairment loss is recognised as an expense in the statement of comprehensive
income.

The recoverable amount of each CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial
estimates reviewed by management covering a five-year period.

Cash flows beyond the five-year period are extrapolated using the estimated growth rates started in note D2(c)(ii). The growth rate does not exceed
the long-term average growth rate for the business in which the CGU operates.

D3 Property, plant and equipment

The movements in the property, plant and equipment asset balances are as follows:

2017

2016

Leasehold
improvements
$m
33.3

Plant and
equipment
$m
46.5

Computer
equipment
$m
110.5

(19.9)

13.4
0.8

(3.3)

10.9
34.1

(23.2)

10.9

(33.6)

12.9
1.4

(3.0)

11.3
47.9

(36.6)

11.3

(85.2)

25.3
6.4

(7.3)

24.4
116.9

(92.5)

24.4

Total
$m
190.3

(138.7)

51.6
8.6

(13.6)

46.6
198.9

(152.3)

46.6

Leasehold
improvements
$m
32.8

Plant and
equipment
$m
46.3

Computer
equipment
$m
101.1

(16.8)

16.0
0.5

(3.1)

13.4
33.3

(19.9)

13.4

(30.6)

15.7
0.2

(3.0)

12.9
46.5

(33.6)

12.9

(78.0)

23.1
9.4

(7.2)

25.3
110.5

(85.2)

25.3

Total
$m
180.2

(125.4)

54.8
10.1

(13.3)

51.6
190.3

(138.7)

51.6

Cost

Accumulated depreciation

Net book value at 1 July
Additions

Depreciation expense

Net book value at 30 June
Cost

Accumulated depreciation

Net book value at 30 June

Property, plant and equipment is measured at cost less accumulated depreciation and any impairment in value. Cost includes expenditure that is
directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. Repairs and maintenance are recognised in profit or loss during the financial period in which they are incurred.

The cost of improvements to leasehold property is capitalised and amortised over the unexpired period of the lease or the estimated useful lives of
the improvements, whichever is the shorter.

Assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing the proceeds on disposal with the carrying amount and are included in profit or loss.

Depreciation of assets begins from the time an asset is implemented and available for use. Depreciation is provided on a straight-line basis on all
plant and equipment, over their estimated useful lives.

The depreciation periods for each class of asset, for the current and previous years, are as follows:

Leasehold improvements

Plant and equipment

Computer equipment

The shorter of minimum lease term and useful life

3 – 10 years

3 – 5 years

/ ASX Annual Report 2017 Other balance sheet assets and liabilities

Other balance sheet assets and liabilities continued

Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, that it is probable
the obligation will be settled and the amount can be reliably estimated.
If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and when appropriate,
the risks specific to the liability. The increase in the provision due to
the passage of time is recognised as a finance cost in profit or loss.

Current employee provisions include liabilities for annual leave and
wages and salaries, including non-monetary benefits that are expected
to be settled wholly within 12 months after the end of the period in
which the employees render the related service. These are recognised
in respect of employees’ services up to the end of the reporting period.
Long service leave provisions that the Company does not have an
unconditional right to defer for 12 months after the reporting date
are recognised as a current provision, regardless of when the actual
settlement is expected to occur. Current employee provisions are
measured at the amounts expected to be paid when the liabilities
are settled.

Non-current employee provisions include long service leave provisions
where the Company has an unconditional right to defer settlement for
at least 12 months after the reporting period. Non-current employee
provisions are not expected to be wholly settled within 12 months
after the end of the reporting date, and are therefore measured as
the present value of expected future payments.

When determining whether employees qualify or are expected to
qualify for the Group’s long service leave arrangements, consideration
is given to history of employee departures and periods of service.
Expected future wage and salary levels are discounted using the
rates attached to a basket of comparable liquid corporate bonds at
the end of each reporting period, which most closely match the terms
to maturity of the related liabilities.

For short-term cash incentives offered to staff the Group recognises
a liability and an expense. A provision is recognised where there is a
contractual obligation or where there is past practice that gives clear
evidence of the amount of the obligation.

Where short-term incentives are deferred to a future period the
value of the incentives is expensed over the term of the deferral
and recognised as a liability. Amounts expected to be wholly settled
within 12 months after the end of the reporting date are recognised
as current, all others are recognised as non-current.

Make-good obligations are provided for office space under operating
leases that require the premises to be returned to the lessor in their
original condition. The operating lease payments do not include the
make-good payment at the end of the lease term. Provisions for
make-good obligations are recognised when the Group becomes
party to operating lease contracts that include make-good clauses.

Lease incentives received or receivable, such as rent-free periods
and premises fit-out allowances, may be included in operating leases
entered into by the Group. The value of lease incentives is included in
the premises provision and is recognised as a reduction in occupancy
expense in profit or loss on a straight-line basis over the term of
the lease. Where the original lease term has been extended, these
incentives will continue to be recognised over the original lease term.

D4 Payables

Trade creditors

Margins payable

Interest payable

Rebates payable

Transaction taxes payable

Employee-related payables

Accrued expenses

Other payables

Total

2017
$m
2.2

1,021.6

8.3

14.4

6.7

20.9

17.2

1.1

1,092.4

2016
$m
1.7

365.9

7.0

19.6

6.6

20.6

14.8

1.6

437.8

ASX is a signatory to the voluntary Business Council of Australia
Supplier Payment Code applicable to small suppliers. The Code sets
out a set of best-practice standards which signatories commit to
comply with and includes prompt and on-time payment to suppliers;
working with suppliers to improve their invoicing and payment
practices; providing suppliers with clear guidance about payment
procedures; implementing payment dispute resolution processes;
and reporting of policies and practices in place that ensure compli-
ance with the Code.

Payables are initially recognised at fair value and represent liabilities
for goods and services provided to the Group prior to the end of the
reporting period that are unpaid. The amounts, stated at amortised
cost using the effective interest method, are unsecured and usually
paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12
months of the reporting date.

Interest payable includes interest owed to participants on cash collat-
eral and commitments lodged. Interest is recognised as a finance
cost in the statement of comprehensive income using the effective
interest rate method.

D5 Provisions

Current
Employee provisions

Premises provisions

Total

Non-current
Employee provisions

Premises provisions

Total

13.6

2.2

15.8

2.9

3.9

6.8

The movements in the premises provision are as follows:

Opening balance at 1 July
Provisions used during the period

Additions during the period

Unwinding of discount

Closing balance at 30 June

8.1
(2.2)

0.1

6.1

12.2

2.3

14.5

3.2

5.8

9.0

9.8
(2.0)

0.2

0.1

8.1

The provisions for employee benefits predominantly relate to annual
and long service leave obligations. Premises provisions comprise
lease rental amortised on a straight-line basis over the term of the
lease, and provisions for make-good and lease incentives.

ASX Annual Report 2017 Other balance sheet assets and liabilities / 63

ASX Limited and Australian Securities Exchange Limited are licensed
to operate financial markets while ASX Clear, ASX Clear (Futures),
Austraclear Limited and ASX Settlement Pty Limited are licensed
to operate clearing and settlement facilities.

In accordance with the Corporations Act 2001, the Group maintains
two fidelity funds for claims about the defalcation of monies in
relation to cash market and derivative trading. ASX Limited acts as
manager for the ASX Division 3 Compensation Fund and Australian
Securities Exchange Limited acts as trustee for the Sydney Futures
Exchange Limited Fidelity Fund. ASX is also the sole member of the
Securities Exchanges Guarantee Corporation (SEGC) which is respon-
sible for administering the NGF, a compensation fund available to
meet certain types of claims arising from dealings with participants
of ASX and, in limited circumstances, participants of ASX Clear, in
accordance with the Corporations Act 2001.

ASX Division 3 Compensation Fund, Sydney Futures Exchange
Limited Fidelity Fund and SEGC are not consolidated into the Group.

All subsidiaries are incorporated in Australia except for Australian
Securities Exchange (US) Inc (incorporated in the US), and New
Zealand Futures and Options Exchange Limited and ASX Energy
Limited (both incorporated in New Zealand). All subsidiaries have
the same reporting date.

Subsidiaries are consolidated from the date on which control is
transferred to the Group and are de-consolidated from the date
that control ceases. Control exists when the Company is exposed
to, or has rights to, variable returns from its involvement with that
entity and has the ability to affect those returns through its power
to direct the activities of the entity. In addition to considering the
existence of potential voting rights that are presently exercisable
or convertible, the Company also considers relationships with other
parties that may result in the Company controlling an entity on the
basis of de facto circumstances.

The Group has two established trusts. LTIP administers the Group’s
employee share scheme while ASX Clearing Corporation Trust manages
the cash of the two CCP subsidiaries. Both trusts are consolidated
as the substance of the relationship is that they are controlled by
the Group.

Group disclosures

E1 Subsidiaries

Parent entity1: ASX Limited

Subsidiaries of ASX Limited:
ACN 611 659 664 Limited2
ASX Acceler8 Pty Limited
ASX Benchmarks Pty Limited
ASX Clearing Corporation Limited
ASX Compliance Pty Limited
ASX Data Analytics Pty Limited
ASX Energy Limited
ASX Futures Exchange Pty Limited
ASX Long-Term Incentive Plan Trust
ASX Operations Pty Limited2
ASX Settlement Corporation Limited2
Australian Securities Exchange Limited2
Australian Stock Exchange Pty Limited
SFE Corporation Limited2

Subsidiaries of ASX Settlement Corporation Limited:
ASX Settlement Pty Limited
Austraclear Limited

Subsidiaries of Austraclear Limited:
Austraclear Services Limited

Subsidiaries of ASX Operations Pty Limited:
ASX Collateral Management Services Pty Limited
Australian Clearing Corporation Limited2
Australian Clearing House Pty Limited
Equityclear Pty Limited
New Zealand Futures and Options Exchange Limited
Options Clearing House Pty Limited
Sydney Futures Exchange Pty Limited

Subsidiaries of ASX Settlement Pty Limited:
CHESS Depositary Nominees Pty Limited

Subsidiaries of Australian Securities Exchange Limited:
Australian Securities Exchange (US) Inc

Subsidiaries of ASX Clearing Corporation Limited:
ASX Clearing Corporation Trust
ASX Clear (Futures) Pty Limited
ASX Clear Pty Limited

1 Parent entity refers to the immediate controlling entity of the entity in which
the investment is shown. The parent entity’s investment in relation to all
subsidiaries during the financial year was 100% (2016: 100%).
2 These subsidiaries are parties to the Deed of Cross Guarantee (the Deed) and
have been granted relief from the necessity to prepare financial statements
in accordance with ASIC Legislative Instrument 2016/785. Refer to note E2 for
details of the Deed.

/ ASX Annual Report 2017 Group disclosures

(b) Balance sheet
Set out below is a consolidated balance sheet for the closed
group.

Group disclosures continued

E2 Deed of Cross Guarantee

Pursuant to ASIC Legislative Instrument 2016/785, the wholly
owned subsidiaries listed below are relieved from the requirement
to prepare financial reports and directors’ reports.

It is a condition of the instrument that the Company and each of
the participating subsidiaries enter into the Deed under which each
company guarantees the debts of the others.

The subsidiaries subject to the Deed at the end of the reporting
period are:

Subsidiary name
ACN 611 659 664 Limited

ASX Operations Pty Limited

Australian Clearing Corporation Limited

Australian Securities Exchange Limited

ASX Settlement Corporation Limited

SFE Corporation Limited

ABN/ACN
611 659 664

42 004 523 782

068 624 813

83 000 943 377

48 008 617 187

74 000 299 392

As at 30 June

Current assets
Cash and funds on deposit

Available-for-sale financial assets

Receivables

Prepayments

Total current assets

Non-current assets
Investments in subsidiaries

Available-for-sale investments

Equity accounted investments

Intangible assets

Property, plant and equipment

Prepayments

Total non-current assets

The above entities represent a ‘closed group’ for the purposes of
the instrument, and as there are no other parties to the Deed that
are controlled by the Company, they also represent the ‘extended
closed group’.

Total assets

Current liabilities
Payables

Current tax liabilities

No entities were added or removed from the Deed during the year.

Provisions

Revenue received in advance

Total current liabilities

Non-current liabilities
Deferred tax liabilities

Provisions

Revenue received in advance

Total non-current liabilities

Total liabilities

Net assets

Equity
Issued capital

Retained earnings

Asset revaluation reserve

Equity compensation reserve

Total equity

(a) Consolidated statement of comprehensive income and
summary of movements in retained earnings
Set out below is a consolidated statement of comprehensive income
and summary of movements in consolidated retained earnings
for the closed group consisting of ASX Limited and the previously
mentioned parties to the Deed.

For the year ended 30 June

Statement of comprehensive income
Total revenue

Total expenses

Profit before income tax expense
Income tax expense

Net profit for the period

Items that may be reclassified to
profit or loss:

Change in the fair value of
available-for-sale investments

Change in the fair value of cash flow hedges

Other comprehensive income for the
period, net of tax

2017
$m

829.5

(231.5)

598.0
(163.4)

434.6

39.6

(0.4)

39.2

2016
$m

816.9

(220.1)

596.8
(163.8)

433.0

15.8

(1.0)

14.8

Total comprehensive income for the period

473.8

447.8

Summary of movements in consolidated
retained earnings:

Retained earnings at the beginning of
the period
Dividends paid

Profit for the period

Retained earnings at the end of the period

574.4

(389.2)

434.6

619.8

517.4

(376.0)

433.0

574.4

2017
$m

159.6

88.7

102.4

16.6

367.3

731.1

431.1

66.7

2016
$m

159.1

45.9

131.2

12.6

348.8

722.0

358.2

66.6

2,375.2

2,365.6

46.6

1.0

51.6

3,651.7

3,564.0

4,019.0

3,912.8

58.9

16.2

15.8

18.2

109.1

69.2

6.8

0.1

76.1

185.2

62.6

9.9

14.5

16.4

103.4

51.1

9.0

0.1

60.2

163.6

3,833.8

3,749.2

3,027.2

619.8

178.0

8.8

574.4

138.8

8.8

3,833.8

3,749.2

ASX Annual Report 2017 Group disclosures / 65

Group disclosures continued

E3 Related party transactions

E4 Parent entity financial information

Dividends paid to the parent entity

421,000

414,000

Total assets

(a) Transactions between subsidiaries
ASX Operations Pty Limited provides operational support for the
majority of the Group’s transactions. Expenses paid, revenues
collected and purchase of capital items on behalf of other entities
within the Group are booked into inter-entity accounts. Interest is
not charged on any inter-entity account.

Transactions between the Company and subsidiaries are eliminated
on consolidation.

Balances receivable by the Company from wholly owned subsidiaries
within the Group are as follows:

As at 30 June

Current
Amounts due from subsidiaries

2017
$000

2016
$000

182,114

161,972

The following transactions occurred between subsidiaries and the
Company during the year:

(b) Transactions with other related entities
The following transactions occurred with other related entities
during the year:

Purchase of services from associates

Contributions to superannuation
funds on behalf of employees

6,671

6,077

These transactions are on an arms length basis and under normal
commercial terms and conditions.

(c) Key Management Personnel (KMP) remuneration
KMP compensation (including non-executive directors) provided
during the financial year is set out in the table below. Further details
are disclosed in the Remuneration Report on pages 17 to 27.

Short-term employee benefits

Post-employment benefits

Long-term benefits

Share-based payments

Total

10,067

279

517

560

11,423

11,561

322

2,504

(503)

13,884

/ ASX Annual Report 2017 Group disclosures

(a) Summary financial information
The individual financial statements for the parent entity show the
following aggregate amounts:

For the year ended 30 June

Statement of comprehensive income
Total revenue

Total expenses

Profit before income tax expense
Income tax expense

Net profit for the period

Other comprehensive income for the
period, net of tax

Total comprehensive income for
the period

As at 30 June

Balance sheet
Current assets

Non-current assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Issued capital

Retained earnings

Asset revaluation reserve

Equity compensation reserve

Total equity

2017
$m

435.2

(0.6)

434.6
(1.5)

433.1

39.6

472.7

190.7

3,680.8

3,871.5

16.1

76.2

92.3

3,779.2

3,027.2

566.2

178.8

7.0

3,779.2

2016
$m

434.6

(0.6)

434.0
(3.5)

430.5

15.8

446.3

165.3

3,598.7

3,764.0

9.9

58.4

68.3

3,695.7

3,027.2

522.3

139.2

7.0

3,695.7

The financial information for the parent entity, ASX, has been prepared
on the same basis as the consolidated financial statements, except
as set out below.

Unlisted shares in subsidiaries are accounted for at cost in the financial
statements of ASX.

ASX elected to form a tax consolidated group (tax group) for income
tax purposes. ASX is the head entity and is therefore liable for the
income tax liabilities of the tax group. The consolidated current and
deferred tax amounts arising from temporary differences of the
members of the tax group are recognised in the separate financial
statements of the members of the tax group using the ‘separate
taxpayer within group’ approach.

ASX has entered into a tax funding agreement with members of the
Australian tax group. The agreement has the objective of achieving
an appropriate allocation of the Group’s income tax expense to
the main operating subsidiaries within the Group. The tax funding
agreement also has the objective of allocating deferred tax assets
relating to tax losses only, and current tax liabilities of the main
operating subsidiaries to ASX. The subsidiaries will reimburse ASX
for their portion of the Group’s current tax liability and will recog-
nise this payment as an inter-entity payable or receivable in their
financial statements for that financial year. ASX will reimburse the
subsidiaries for the deferred tax asset from any unused tax losses
or credits by making a payment equal to the carrying value of the
deferred tax asset.

Group disclosures continued

(b) Guarantees entered into by the parent entity
The parent entity, ASX, is party to a Deed of Cross Guarantee
together with the entities defined in note E2. Under the Deed, the
Company guarantees to each creditor payment in full of any debt
in the event of winding up of any of the subsidiaries under certain
provisions of the Corporations Act 2001. No deficiencies of assets
exist in any of these entities.

In accordance with the Financial Stability Standards recovery rules
the parent entity, ASX, is obligated in certain circumstances to
replenish a shortfall in the financial resources available to the CCPs
up to predetermined levels for any one participant default. No
replenishments were made in the current or prior year.

(c) Contractual commitments and contingencies
ASX has an agreement with ASX Clear for a $150.0 million (2016:
$150.0 million) standby liquidity loan facility that may be used in
limited and specific circumstances following the default of clearing
participants.

ASX has an agreement with CHESS Depositary Nominees Pty Limited
(CDN) which provides $10.0 million (2016: $10.0 million) in funds to
support CDN’s licence obligations if required. No payments were made
under either facility in the current or prior financial year.

The NGF, which is administered by SEGC, is maintained to provide
compensation for prescribed claims arising from dealings with
market participants as set out in the Corporations Act 2001. If the
net assets of the NGF fall below the minimum amount determined
by the Minister, SEGC may determine that ASX must pay a levy to
SEGC. Where a levy becomes payable, SEGC may determine that
ASX or market participants must pay a levy, provided that the
total amounts payable under this levy do not exceed the amount
payable by ASX to SEGC. No levies were called in the current or
prior financial year.

E5 Other disclosures

E5.1 Commitments

(a) Capital commitments
Capital commitments contracted for but not yet incurred as at
balance date are as follows:

Intangible assets – software

2017
$m
10.0

2016
$m
20.4

(b) Operating lease commitments
Commitments for minimum lease payments of non-cancellable
leases are as follows:

Due:
Not later than one year

Later than one year but not later than
five years

Later than five years

Total

8.1

31.6

36.4

76.1

10.0

31.4

44.8

86.2

The Group’s major leases are for the premises from which it operates.
These leases are all generally long-term with unexpired periods up
to 11 years, with options to extend for further periods included in
certain lease agreements. Future rentals are subject to indexation
and periodical rent reviews. The operating lease expense for the
year was $11.4 million (2016: $10.7 million).

Operating leases are those in which a significant portion of the risks
and rewards of ownership are not transferred to the Group as lessee.
Minimum lease payments, which includes fixed rental increases, are
recognised in profit or loss on a straight-line basis over the period
of the lease.

In accordance with the Australian Financial Services Licence of ASX
Collateral Management Services Pty Limited, the Group has an
obligation to fund any amounts required by the subsidiary.

E5.2 Share-based payments

ASX Limited did not have any other contractual commitments or
contingent liabilities for the years ended 30 June 2017 or 2016.

(d) Borrowings
The Group did not have any drawn borrowings during the current
or prior financial year. ASX Limited has an unsecured committed
facility that can only be called upon to provide short-term liquidity
to ASX Clear following a clearing participant default. The facility
limit is $100.0 million (2016: $100.0 million) and remained undrawn
at the date of this report.

(a) Long-term incentive plan
The Group provides performance rights to ordinary shares of the
Company to employees as part of the LTI plan to recognise perfor-
mance, skills and behaviours that deliver sustainable long-term
shareholder value. They entitle certain KMP to performance rights
over ASX Limited shares.

Under the plans, participants are granted performance rights that
only vest if certain performance conditions are met. All performance
rights are to be settled by physical delivery of ordinary shares in
ASX Limited subject to the performance conditions being attained.

The number of rights that vest depends on an EPS hurdle being
achieved and ASX’s total shareholder return (TSR) relative to a
comparator group. The plans do not carry rights to dividends. The
terms and conditions of these grants are shown in the following
table.

During the year, 5,419 performance rights vested following the
partial attainment of performance hurdles under the September
2013 LTI plan. The remaining 24,689 performance rights under this
plan lapsed.

ASX Annual Report 2017 Group disclosures / 67

Group disclosures continued

Grants outstanding at the end of the reporting period:

Grant date/employees entitled

Performance rights granted to
KMP on 28 September 2016

Performance rights granted to
KMP on 30 September 2015

Performance rights granted to
KMP on 23 September 2014

Total

Number of
instruments granted

31,334

13,041

27,432

71,807

Vesting conditions

4 years service; 50% of performance rights
require relative TSR and 50% of performance
rights require growth in EPS above the target

3 years service; 30% of performance rights
require relative TSR and 70% of performance
rights require growth in EPS above the target

Contractual
life of the award

Weighted average
fair value

4 years

$29.68

4 years

$23.34

3 years

$27.34

Employees have full ownership rights of the shares under the
scheme including voting rights and entitlement to dividends. The
shares are subject to a holding lock until the day after the Annual
General Meeting in the year that they vest and cannot be transferred
to another person or disposed of during this period.

The shares are recognised at their fair value, being the market price
on the purchase date, of $51.45 for FY16.

(d) Employee expenses
The table below shows the total share-based payments recognised
within staff expenses during the year and includes the impact of
reversals resulting from non-market based performance hurdles
not being achieved.

Long-term incentive plan

Employee share purchase plan

Deferred short-term incentive plan

Other share-based payments

Total

2017
$m
-

0.3

1.7

0.2

2.2

2016
$m
(0.5)

0.2

(0.1)

The fair value of the performance rights for the EPS component is
calculated using the share price at market close on the grant date,
less the present value of the expected dividends over the performance
period. The fair value of performance rights for the TSR component
is calculated by an independent valuer using a Black-Scholes option
valuation model and Monte Carlo simulation at grant date.

Fair values are recognised over the vesting period as an expense with a
corresponding increase in the equity compensation reserve. Fair values
include the impact of any market performance conditions and the
impact of any non-vesting conditions, but excludes the impact of any
service and non-market performance vesting conditions. Non-market
vesting conditions are included in assumptions about the number
of performance rights that are expected to vest. The impact of any
revisions to the original estimates are recognised in profit or loss with
a corresponding adjustment to equity.

(b) Employee share purchase plan
The ASX employee share purchase plan offers the opportunity for
employees to purchase fully paid ordinary shares in ASX through
salary sacrifice up to the value of $1,000 at a discount of 10%. All
Australian permanent full-time and part-time employees, and
maximum-term contractors with end dates beyond 30 June are
eligible to participate in the scheme.

The number of shares allocated to each employee is the offer amount
divided by the volume weighted average price (VWAP) over the five
business days up to and including the offer close date, rounded
down to the nearest share.

Employees have full ownership rights of the shares under the
scheme including voting rights and entitlement to dividends. The
shares are subject to a three-year holding lock and as such cannot
be transferred to another person or disposed of until the earlier of
cessation of employment or three years from grant date.

The shares are recognised at their fair value being the market price
on the purchase date.

Key details of the plan are set out in the table below.

Offer close date

Grant date

VWAP

Purchase price (fair value)

Number of shares issued

2017

2016
3 March 2017 25 February 2016

9 March 2017

2 March 2016

$51.64

$51.97

6,403

$41.70

$41.83

6,672

(c) Short-term incentive (STI) deferred equity plan
Under the Group's STI incentive scheme, KMP and Executive General
Managers (EGMs) receive 40% of their STI awarded in cash, 30% in
shares deferred for two years and 30% in shares deferred for four
years. General Managers (GMs) receive 50% of their STI awarded
in cash and the remaining 50% in shares deferred for two years.
If the employee ceases employment during this period, the shares
are forfeited, except in certain limited circumstances.

The number of shares allocated to each eligible employee is the
amount of the STI award deferred into shares divided by the VWAP
over the five business days up to and including the offer close date
of 25 August 2016 for FY16, rounded to the nearest share.

/ ASX Annual Report 2017 Group disclosures

Group disclosures continued

E5.3 Auditor’s remuneration
The following fees were paid or payable by the Group for and on behalf of all Group entities for services provided by the auditor and its
related practices during the financial year:

PricewaterhouseCoopers Australia

Statutory audit services:
Audit and review of the financial statements and other audit work under the Corporations Act 2001

Audit of information technology platforms

Other audit services:
Model validation

Code of Practice compliance

Non-audit services:
Tax compliance services

Due diligence services

Total remuneration for PricewaterhouseCoopers Australia

E5.4 Other accounting policies

2017
$

611,729

179,940

152,500

90,000

73,773

1,107,942

2016
$

627,889

194,440

153,000

10,200

57,265

240,950

1,283,744

(a) New and amended standards and interpretations adopted by the Group
The new standards and amendments to standards that are mandatory for the first time in the annual reporting period commenced on 1 July
2016 do not affect any amounts recognised in the current or prior periods, and are not likely to materially affect amounts in future periods.
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period ended 30 June 2017.

(b) New and amended standards and interpretations not yet adopted by the Group
The following new or amended accounting standards and interpretations have been issued by the AASB but are not mandatory for the
annual reporting period ended 30 June 2017 and have not been early adopted by the Group. The Group’s assessment of the impact of
these standards and interpretations is set out below.

Title
AASB 9
Financial
Instruments

Nature of change and impact on the Group
The new standard changes the criteria for classifying and recognising financial instruments and introduces a
new expected credit loss model for calculating impairment. It also aligns hedge accounting more closely with
common risk management practices.

Mandatory and anticipated
date of application
Periods beginning on or
after 1 January 2018

The Group's current debt securities are classified as available-for-sale and measured at fair value through
other comprehensive income. On initial adoption of the standard all debt securities other than those lodged
by participants to cover margin obligations will be reclassified and measured at amortised cost. This is
because the contractual cash flows of the securities are solely payments of principal and interest and the
Group's business model for managing the portfolio is to hold the securities in order to collect these contrac-
tual cash flows. The opening asset revaluation reserve for the comparative period (1 July 2017) will be
restated to reverse the fair value impact, net of tax of $0.5 million (refer to note B2).

Debt securities lodged by participants will be reclassified to fair value through profit and loss as they do not
meet the criteria for amortised cost or fair value through other comprehensive income.

The Group's investments in equity instruments will continue to be measured at fair value through other
comprehensive income. There will only be an impact on future financial periods when the investments are
sold as the gain or loss can no longer be recycled to profit or loss and must remain in equity.

The new impairment model will not have a material impact on the financial statements on the date of adoption.

There will be no impact on the accounting for the Group’s financial liabilities as the new standard only impacts
financial liabilities designated at fair value through profit or loss and the Group does not have any such liabilities.

AASB 15
Revenue from
Contracts with
Customers

This standard will replace AASB 111 Construction Contracts and AASB 118 Revenue. The new standard is based
on the principle that revenue is recognised when control of a good or service transfers to the customer.

Periods beginning on or
after 1 January 2018

There will be no impact on the Group’s accounting policies on adoption of this standard.

AASB 16
Leases

This standard will replace AASB 117 Leases. It contains a revised definition of a lease and has removed the
distinction between operating and finance leases by lessees.

Periods beginning on or
after 1 January 2019

On initial adoption of the standard, the Group will be required to recognise a right of use asset and a corre-
sponding lease liability measured at the present value of future lease payments on the balance sheet for all
leases. A depreciation and finance charge will be recognised over the term of the lease. Certain performance
metrics and ratios will be impacted as a result of these changes.

The Group’s assessment of the potential accounting, disclosure and financial impact on adoption of the
standard will continue up to the date of application.

There are no other standards that are not yet effective or are expected to have a material impact on the Group in the current or future
reporting periods or on foreseeable future transactions.

E5.5 Subsequent events
From the end of the reporting period to the date of this report, no matter or circumstance has arisen which has significantly affected the
operations of the Group, the results of those operations or the state of affairs of the Group.

ASX Annual Report 2017 Group disclosures / 69

Directors’ declaration

In the opinion of the directors of ASX Limited (the Company):

a. the financial statements and notes that are contained in pages 41 to 69 and the Remuneration Report set out on pages 17 to 27 in the

Annual Report, are in accordance with the Corporations Act 2001, including:

i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its performance for the financial

year ended on that date, and

ii. complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting

requirements

b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable

c. at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified

in note E2 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed of Cross
Guarantee described in note E2, and

d. the financial statements also comply with International Financial Reporting Standards.

The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer
and Chief Financial Officer for the financial year ended 30 June 2017.

Signed in accordance with a resolution of the directors:

Rick Holliday-Smith
Chairman

Dominic J Stevens
Managing Director and Chief Executive Officer

Sydney, 17 August 2017

/ ASX Annual Report 2017 Directors’ declaration

Independent auditor’s report to the members of ASX Limited

Report on the audit of the financial report

Our opinion
In our opinion:

The accompanying financial report of ASX Limited (the Company) and its controlled entities (together the Group) is in accordance with
the Corporations Act 2001, including:

• giving a true and fair view of the Group's financial position as at 30 June 2017 and of its financial performance for the year then ended;

• complying with Australian Accounting Standards and the Corporations Regulations 2001.

What we have audited
The Group financial report comprises:

• the consolidated balance sheet as at 30 June 2017;

• the consolidated statement of comprehensive income for the year then ended;

• the consolidated statement of changes in equity for the year then ended;

• the consolidated statement of cash flows for the year then ended;

• the notes to the consolidated financial statements, which include a summary of significant accounting policies; and

• the directors’ declaration.

Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial report section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.

PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001

T: +61 2 8266 0000 F: +61 2 8266 9999 www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

ASX Annual Report 2017 Independent auditor’s report to the members of ASX Limited / 71

Independent auditor’s report to the members of ASX Limited

Our audit approach

An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements
may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the financial report.

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a
whole, taking into account the geographic and management structure of the Group, its accounting processes and controls, and the industry
in which it operates.

Materiality
• For the purpose of our audit we used overall Group materiality of $31 million, which represents approximately 5% of the Group’s profit

before tax.

• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent

of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.

• We chose Group profit before tax because, in our view, it is the benchmark against which the performance of the Group is most commonly

measured, and is a generally accepted benchmark.

• We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds.

Audit scope
• Our audit focused on areas where we have identified a higher risk of material misstatement, including areas where the entity has made
subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.

• We tailored the scope of our audit to ensure we obtained sufficient appropriate audit evidence to express an opinion on the financial
report as a whole, taking into account the structure of the Group, the Group’s processes and controls, and the industry in which the Group
operates. The accounting processes are structured around a Group Finance function at its head office in Sydney, where we predominantly
performed our audit procedures.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for
the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular
audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee.

/ ASX Annual Report 2017 Independent auditor’s report to the members of ASX Limited

Independent auditor’s report to the members of ASX Limited

Key audit matter

Goodwill impairment assessment
Refer to page 61 note D2(c) for details of the Group’s impairment test and assumptions.

The Group’s goodwill is recognised in two Cash Generating Units (CGUs): ‘exchange-traded’ ($2,242.2 million) and ‘non-exchange traded’
($75.4 million).

We focused on this area due to the size of the goodwill balance ($2,317.6 million as at 30 June 2017), and because the Group’s assessment
of the ‘value in use’ of the CGUs involves judgements about the future results of the business and the discount rates applied to future
cash flow forecasts.

The Group has performed an impairment assessment over the goodwill balance by:

1. calculating the value in use for each CGU using a discounted cash flow model. These models used cash flows (revenues, expenses
and capital expenditure) for each CGU for five years, with a terminal growth rate applied to the 5th year. These cash flows were then
discounted to net present value using the Company’s weighted average cost of capital (WACC); and

2. comparing the resulting value in use of each CGU to their respective book values.

The Group also performed a sensitivity analysis over the value in use calculations, by varying the assumptions used (terminal growth rate
and WACC) to assess the impact on the valuations.

As a final check, the Group compared the book values of both CGUs to the ASX Limited market capitalisation and to major analyst valu-
ations for the Company.

How our audit addressed the key audit matter

While only 3% of the goodwill relates to the non-exchange traded CGU, the balance is still well above our materiality threshold and so we
perform detailed procedures over both CGUs which included the following, amongst others:

We evaluated the Group’s cash flow forecasts and the process by which they were developed, including considering the mathematical
accuracy of the underlying calculations. We also compared them to the latest Board-approved budgets. We found that the budgets used in
the value-in-use calculations were consistent with the Board-approved budgets, and that the key assumptions were subject to oversight
by the directors.

We also challenged:

• the Group’s key assumptions for growth rates in the forecasts by comparing them to historical results and economic and industry fore-

casts; and

• the discount rate used in the model by assessing the cost of capital for the Group by comparing it to market data and industry research.

We found that the growth rate assumptions were consistent with historical results adjusted for the economic outlook and industry forecasts.

We found that the discount rate used by the Group of 9.25% pre-tax was consistent with market data and industry research.

We then stress-tested the assumptions used by analysing the impact on results from using other possible growth rates and discount rates
which were within a reasonably foreseeable range.

We found that headroom remained between the stress-tested value-in-use calculations and the carrying value of the CGUs in the financial
statements. In particular, we noted that headroom remained even when a zero terminal growth rate was assumed, in conjunction with
no revenue growth for the first five years.

As a final test, we also compared the Group’s net assets as at 30 June 2017 of $3.9 billion to its market capitalisation of $10.4 billion, and
noted the $6.5 billion of implied headroom was consistent with the results of our testing.

ASX Annual Report 2017 Independent auditor’s report to the members of ASX Limited / 73

Independent auditor’s report to the members of ASX Limited

Key audit matter

Valuation and existence of available-for-sale financial assets
Refer to page 52 note B2 for details of the assets and page 57 note B3(d) for the level 1 or 2 classification.

We focused on this area due to the size of the balance and the inherent judgement involved in determining the fair value of financial
instruments.

As at 30 June 2017, the available-for-sale assets were valued at $3,401.8 million (2016: $3,796.4 million).

Of these assets, $192.2 million were classified as ‘level 1’ financial instruments in accordance with the classification under Australian
Accounting Standards where quoted prices in active markets are available for identical assets.

The remaining $3,209.6 million were classified as ‘level 2’ financial instruments in accordance with the classification under Australian
Accounting Standards where values are derived from observable prices (or inputs to valuation models) other than quoted prices included
within level 1.

The valuation of the level 2 securities therefore requires a higher degree of judgement.

How our audit addressed the key audit matter

Our audit procedures included the following, amongst others:

There were no material differences noted between the available-for-sale security balances held at 30 June 2017 and the Austraclear
holdings statements. Austraclear provides depository, registration, cash transfer and settlement services for debt instrument securities
in financial markets in Australia.

As Austraclear is owned and operated by the Company, our work included testing the:

1. controls used to manage the information technology activities and computer environment, covering the overall IT computer environ-
ment, program development, program changes, access to programs and data, and computer operations in place at Austraclear;

2. operation of the Austraclear control that matches trade details between counterparties, by inputting a range of test trades, with

both correct and incorrect details, to test that only appropriate trades were processed by the system; and

3. generation of the Austraclear holdings reports by running test reports and comparing the output to the observed data in the

system.

We found these controls could be relied upon for the purposes of our audit.

To test valuation, we first understood and evaluated the controls in place over the valuation of available-for-sale securities.

For both level 1 and level 2 securities we then used independent sources of information to determine an acceptable range of valuations
for 100% of the securities held at 30 June 2017, and compared this to the valuations recorded on the balance sheet.

We found that all securities tested were recorded at values materially consistent with the valuations that we independently calculated.

Other information
The directors are responsible for the other information. The other information comprises the Letter from the Chairman and the CEO; ASX
Limited Board; Corporate Governance; Environment, Social and Governance; Remuneration Report; Operating and Financial Review;
Directors' Report; Key Financial Ratios; Transaction Levels and Statistics; Shareholder Information; and Directory included in the Group’s
Annual Report for the year ended 30 June 2017 but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclu-
sion thereon.

/ ASX Annual Report 2017 Independent auditor’s report to the members of ASX Limited

Independent auditor’s report to the members of ASX Limited

In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and Corporations Act 2001 and for such internal control as the directors determine is necessary to enable
the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclos-
ing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assur-
ance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board
website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor's report.

Report on the Remuneration Report

Our opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 27 for the year ended 30 June 2017.

In our opinion, the Remuneration Report of ASX Limited for the year ended 30 June 2017 complies with section 300A of the Corporations
Act 2001.

Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.

PricewaterhouseCoopers

Matthew Lunn
Partner

Sydney, 17 August 2017

ASX Annual Report 2017 Independent auditor’s report to the members of ASX Limited / 75

Key financial ratios

Year ended 30 June 2017
Basic earnings per share (EPS)

Diluted EPS

Underlying EPS

Dividend per share – interim

Dividend per share – final

Statutory return on equity

Underlying return on equity

EBITDA/operating revenue

EBIT/operating revenue

Total expenses (including depreciation and amortisation)/
operating revenue

Capital expenditure ($’000)

Net tangible asset backing per share

Net asset backing per share

Shareholders’ equity as a % of total assets (excluding
participants’ balances)

Shareholders’ equity as a % of total assets (including
participants’ balances)

Share price at end of period

Ordinary shares on issue at end of period

Weighted average number of ordinary shares

Market value of ordinary shares on issue ($m)

Market to book ratio

Full-time equivalent permanent staff:
- number at period end

- average during the period

Notes
1

5,6

FY13
195.5c

195.5c

87.9c

82.3c

11.5%

76.3%

71.4%

28.6%

$38,881

$5.04

$18.05

91.9%

45.1%

$33.07

FY14
198.5c

198.5c

88.2c

89.9c

10.6%

76.7%

71.5%

28.5%

$43,235

$6.53

$18.96

91.3%

45.8%

$35.64

FY15
205.7c

205.7c

208.4c

92.3c

95.1c

10.8%

10.9%

77.1%

71.6%

28.4%

FY16
220.4c

220.4c

99.1c

99.0c

11.4%

77.1%

71.4%

28.6%

FY17
224.5c

224.5c

102.0c

99.8c

11.4%

76.3%

70.3%

29.7%

$44,404

$50,237

$50,329

$6.97

$19.42

90.1%

46.7%

$39.90

$7.25

$19.75

87.6%

36.6%

$45.76

$7.59

$20.19

76.2%

29.6%

$53.61

184,066,764

193,595,162

178,068,323

193,022,315

193,413,893

193,415,430

$6,087

1.83

$6,900

1.88

529

515

526

534

$7,724

2.05

515

524

$8,859

2.32

$10,379

2.66

546

534

554

556

Notes
1. Based on statutory net profit after tax (NPAT) including significant items and weighted average number of shares.
2. Based on underlying NPAT excluding significant items and weighted average number of shares.
3. Based on statutory NPAT including significant items.
4. Based on underlying NPAT excluding significant items.
5. Operating revenue excludes interest and dividend revenue (underlying).
6. EBITDA – earnings before interest, tax, depreciation and amortisation; EBIT – earnings before interest and tax.

These metrics along with total expenses exclude significant items.

/ ASX Annual Report 2017 Key financial ratios

Transaction levels and statistics

Year ended 30 June 2017

Listings and Issuer Services

Total domestic market capitalisation ($bn)

Total number of listed entities (includes stapled entities)

Number of new listings

Average annual listing fee

Average initial listing fee

Average fee per $m of initial capital

Average fee per $m of secondary capital

Initial capital raised ($m)

Secondary capital raised ($m)

Other secondary capital raised including scrip-for-scrip ($m)

Total capital raised ($m)

Number of new warrant series quoted

Total warrant series quoted

Number of CHESS holding statements issued (m)

Cash market

Trading days

Total cash market trades (‘000)

Average daily cash market trades

Continuous trading ($bn)

Auctions ($bn)

Centre Point ($bn)

Trade reporting ($bn)

Total cash market value ($bn)
Average daily on-market value ($bn)

Average daily value (including trade reporting) ($bn)

Average trade size

Total billable value ($bn)

FY13

FY14

FY15

FY16

FY17

$1,347

2,185

$27,463

$87,139

$721

$1,026

$9,908

$32,448

$4,027

$46,383

6,690

5,140

11.1

252

174,750

693,454

$645.161

$147.418

$36.953

$216.420

$1,552

2,192

107

$28,333

$166,786

$645

$1,002

$27,659

$33,378

$4,985

$66,022

4,206

3,564

11.8

253

181,861

718,817

$612.491

$157.338

$61.135

$177.933

$1,045.952
$3.292

$1,008.897
$3.284

$4.151

$5,985

$3.988

$5,548

$1,612

2,220

120

$31,859

$174,080

$537

$854

$38,916

$38,787

$11,170

$88,873

2,903

3,050

13.1

254

190,647

750,578

$698.315

$193.292

$74.933

$145.909

$1,112.449
$3.805

$4.380

$5,835

$1,620

2,204

124

$34,101

$150,199

$790

$819

$23,587

$45,299

$9,704

$78,590

2,959

2,886

14.0

$1,777

2,239

152

$35,419

$105,680

$1,096

$1,124

$14,652

$37,160

$4,156

$55,968

1,828

2,827

13.6

254

253

235,923

928,829

$770.805

$209.412

$78.941

$144.991

266,433

1,053,096

$735.447

$236.983

$107.043

$167.377

$1,204.149
$4.170

$1,246.850
$4.267

$4.741

$5,104

$4.928

$4,680

$1,024.227

$989.760

$1,092.799

$1,189.162

$1,225.392

Average cash market trading, clearing and settlement fee per trade

$0.66

$0.64

$0.66

$0.59

Average trading fee per dollar of value (bps)

Average trading, clearing and settlement fee per dollar of value (bps)

Velocity (total value/average market capitalisation)1
Number of dominant settlement messages (m)

1 Total value transacted on all venues.

0.31

1.10

86%

15.4

0.33

1.16

78%

15.2

0.32

1.13

82%

15.7

0.33

1.16

92%

17.1

$0.56

0.37

1.19

88%

17.8

ASX Annual Report 2017 Transaction levels and statistics / 77

Transaction levels and statistics continued

Year ended 30 June 2017

Equity options (excluding ASX SPI 200)
Trading days (exchange-traded options)

Total contracts traded – equity options (‘000)
Single stock options

Index options and futures

Total equity options (‘000)

Average daily derivatives contracts

Average fee per derivatives contract

Futures
Trading days (futures and options)

Total contracts traded – futures (‘000)
ASX SPI 200

90 day bank bills

3 year bonds

10 year bonds

20 year bonds

30 day interbank cash rate

Agricultural

Electricity
Other1
NZ$ 90 day bank bills

Total futures

Total contracts traded – options on futures (‘000)
ASX SPI 200

90 day bank bills

3 year bonds

Overnight 3 year bonds

Intra-day 3 year bonds

10 year bonds

Electricity
Other2

Total options on futures

Total futures and options on futures contract volume (‘000)

Daily average contracts – futures and options

Average fee per contract – futures and options

OTC markets
Total notional cleared value ($bn)3
Open notional cleared value (period end $bn)3

1 Other includes VIX and sector futures.
2 Other includes overnight and intra-day 10 year bonds and agricultural.
3 Cleared notional value is double sided.

FY13

252

145,531

11,762

157,293

624,179

$0.18

FY14

253

116,343

8,249

124,592

492,460

$0.18

FY15

254

109,546

10,958

120,504

474,426

$0.20

FY16

254

88,701

12,768

101,469

399,486

$0.23

FY17

253

93,295

10,388

103,683

409,814

$0.21

255

256

257

256

10,259

25,866

47,499

21,211

N/A

4,780

354

168

1,176

9,715

25,903

47,886

25,520

N/A

3,517

181

165

1,157

111,332

114,064

349

526

1,914

1,443

4,276

115,608

453,365

$1.46

473

416

1,523

1,527

3,990

118,054

461,148

$1.57

10,301

28,706

49,717

29,498

N/A

3,678

135

224

107

1,394

123,760

454

245

896

927

2,581

126,341

493,520

$1.44

12,105

29,567

50,105

36,079

423

4,112

132

257

137

1,915

134,832

363

356

579

660

1,991

136,823

532,386

$1.42

12,255

28,931

53,233

41,697

545

2,455

344

102

1,422

141,075

202

152

478

460

1,343

142,418

556,321

$1.39

N/A

124.413

120.409

805.869

440.506

2,742.002

1,600.194

5,165.949

2,924.287

/ ASX Annual Report 2017 Transaction levels and statistics

Transaction levels and statistics continued

Year ended 30 June 2017

Austraclear
Settlement days

Transactions (‘000)
Cash transfers

Fixed interest securities

Discount securities

Foreign exchange

Other

Total transactions (‘000)

Average daily settlement volume

Securities holdings (monthly average $bn)

Securities holdings (period end $bn)

FY13

FY14

FY15

FY16

FY17

252

587

763

183

1,566

6,214

$1,374.5

$1,406.8

253

600

800

162

1,593

6,298

$1,475.5

$1,571.8

254

602

774

157

1,564

6,156

$1,671.5

$1,752.5

254

590

717

150

253

582

741

146

1,470

5,786

$1,857.6

$1,895.6

1,479

5,844

$1,915.4

$1,860.3

Average settlement and depository fee (including portfolio holdings)
per transaction (excludes registry services revenue)

$14.01

$14.18

$14.88

$15.60

$16.34

System uptime (period average)
ASX Trade

CHESS

Futures trading

Futures clearing

Austraclear

Technical Services (number at period end)

Liquidity access
ASX sessions

ASX gateways

ASX liquidity cross-connects

Futures gateways

ASX ITCH access

ASX OUCH access

Futures liquidity cross-connects

Futures ITCH access

Community and connectivity
ASX Net connections

ASX Net service feeds

Australian Liquidity Centre service connections

Application services
ASX Trader/ASX Best terminals

Hosting
Australian Liquidity Centre cabinets

Other data centre cabinets

100.00%

99.99%

100.00%

99.97%

100.00%

99.95%

100.00%

99.97%

100.00%

99.98%

99.96%

100.00%

99.93%

99.79%

100.00%

99.98%

1,526

1,431

1,185

248

272

221

140

356

415

491

117

233

241

297

122

356

622

318

142

207

228

357

126

358

679

277

188

1,113

192

208

306

116

382

819

251

231

1,033

179

199

334

123

437

871

230

285

ASX Annual Report 2017 Transaction levels and statistics / 79

Shareholder information

ASX Limited – ordinary shares

Largest 20 shareholders at 27 July 2017

ASX has ordinary shares on issue. These are listed on the Australian
Securities Exchange under ASX code: ASX. Details of trading activity
are published daily in most major Australian newspapers (print,
online and mobile) and by electronic information vendors, and
broadcast on television and radio.

At a general meeting, every shareholder present in person or by
direct vote, proxy, attorney or representative has one vote on a
show of hands and, on a poll, one vote for each fully paid share
held unless that share is a ‘default share’.

Name
1. HSBC Custody Nominees (Australia) Limited

2. BNP Paribas Nominees Pty Limited

3. JP Morgan Nominees Australia Limited

4. Citicorp Nominees Pty Limited

5. National Nominees Limited

6. Bond Street Custodians Limited

7. Australian Foundation Investment
Company Limited

8. Milton Corporation Limited

The ASX constitution classifies default shares as any shares held
above the 15% voting power limit by one party and its associates.

9. AMP Life Limited

10. Brickworks Limited

Distribution of shareholdings at 27 July 2017

Number of shares
held
1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

Total

Number of
holders
40,911

10,855

813

655

Number of
shares
15,176,952

21,343,357

5,695,497

20,573,825

130,805,531

% of issued
capital
7.84

11.02

2.94

10.63

67.57

11. BT Portfolio Services Limited

12. Senior Master of the Supreme Court

13. Law Venture Pty Ltd

14. Navigator Australia Limited

15. Avanteos Investments Limited

16. Gwynvill Trading Pty Limited

17. Netwealth Investments Limited

18. Mr George Edward Carrington

19. Asgard Capital Management Ltd

53,332

193,595,162

100.00

20. Mr Michael Denis Briody

The number of investors holding less than a marketable parcel of
10 ASX shares (based on a share price of $52.50) was 302. They
hold 904 ASX shares in total.

Shareholders' calendar

On-market buy-back

FY17

Total

123,304,210

Number
of shares
47,298,468

% of issued
capital
24.43

25,251,030

23,511,939

13,422,373

6,922,196

2,207,100

708,685

548,965

441,419

375,500

356,422

333,084

310,365

305,588

302,611

241,559

197,844

195,000

190,588

183,474

13.04

12.14

6.93

3.58

1.14

0.37

0.28

0.23

0.19

0.18

0.17

0.16

0.12

0.10

0.09

63.67

There is no current on-market buy-back.

Substantial shareholders at 27 July 2017

Full-year financial results announcement

17 August 2017

Full-year final dividend
Ex-dividend date

Record date for dividend entitlements

7 September 2017

8 September 2017

27 September 2017

26 September 2017

The following organisations have disclosed a substantial share-
holder notice to ASX.

Payment date

Annual General Meeting

Name

UniSuper Limited

Schroder Investment Management
Australia Limited

Number
of shares

% of voting
power

FY181

18,777,548

10,542,882

9.70%

5.45%

Half-year financial results announcement

15 February 2018

Half-year interim dividend
Ex-dividend date

Record date for dividend entitlements

Payment date

8 March 2018

9 March 2018

28 March 2018

Full-year financial results announcement

16 August 2018

Full-year final dividend
Ex-dividend date

Record date for dividend entitlements

Payment date

Annual General Meeting

1 Dates are subject to final ASX Board approval.

6 September 2018

7 September 2018

26 September 2018

/ ASX Annual Report 2017 Shareholder information

Shareholder information continued

Annual General Meeting 2017

The ASX AGM will be held in the ASX Auditorium, lower ground floor,
Exchange Square, 18 Bridge Street Sydney, New South Wales, at
10am (Sydney time) on Tuesday 26 September 2017.

ASX’s Notice of Annual General Meeting has been released on the
Market Announcements Platform. Shareholders will receive a copy
of the Notice of Meeting in accordance with their communications
election.

The AGM will be webcast live on the internet. Please visit www.
asx.com.au/agm

A copy of the webcast will be placed on the ASX website after the
event.

The external auditor will be present at the AGM to answer questions
relevant to the external audit.

Electronic communication

ASX encourages shareholders to receive information electronically.

Shareholders who currently receive information by post can log in
at www.linkmarketservices.com.au to provide their email address
and elect to receive electronic communications.

ASX emails shareholders when important information becomes
available such as financial results, dividend statements, notice of
meetings, voting forms and Annual Reports.

Electronic communication allows ASX to communicate with share-
holders quickly and reduces ASX’s paper usage.

For further information, please contact ASX’s share registry, Link
Market Services, on 1300 724 911 (for the cost of a local call) or
asx@linkmarketservices.com.au

Important information about dividend payments

Australian and New Zealand shareholders receive their dividend
payments by direct credit only. No cheque payments are made to
these shareholders.

If you have not already done so, please provide direct credit instruc-
tions by visiting www.linkmarketservices.com.au

ASX Annual Report 2017 Shareholder information / 81