ASX flags ‘clear plans’ to strengthen operational risk management following S&P downgrade
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More news: The ASX said it has “clear plans in place” to strengthen the group’s operational risk management after S&P downgraded its outlook for the bourse operator citing “recurring operational lapses”.
An ASX spokesperson noted that the outlook downgrade from ‘stable’ to ‘negative’ “reflects S&P’s observation” that the bourse operator needs to strengthen risk management practices to the satisfaction of its regulatory agencies.
The ASX said it is "improving data controls for managing clearing credit risk” and flagged that the “change to outlook does not affect ASX’s funding profile”.
What they said: “S&P has acknowledged the substantial upgrades that ASX is currently undertaking on its risk management program as part of its multi-year transformation,” the spokesperson said.
“ASX has an acute focus on improving operational risk management and organisational resilience under the Group’s Accelerate program.”
S&P Global downgrades ASX outlook on risk management lapses
The news: S&P Global has downgraded its outlook on bourse operator ASX following multiple risk management lapses over the past two years.
The numbers: ASX shares were up 0.4% to $57.38 at 2:30pm AEDT.
The context: S&P Global revised its outlook on ASX to 'negative', reflecting its view that the "recurring operational lapses indicated potential weaknesses in its risk management and governance, which could hinder its business operations".
However, S&P Global analysts Nico DeLange and Gabriel Casper said they expect ASX to retain its dominant market and financial position. They revised ASX's rating outlook from 'stable' to 'negative' and affirmed their 'AA-' long-term and 'A-1+' short-term issuer credit ratings.
What they said: "In our view, such operational failure events suggest a decline in ASX's operational resilience, reducing the headroom at our current ratings," S&P Global analysts Nico DeLange and Gabriel Casper wrote.
"In addition, several occurrences of cover 2 breaches in the past two years dampen the robustness of ASX's clearing and settlement management. While we have seen other occurrences among global FMI peers through a time of increased market volatility, the frequency of ASX's breaches makes it a negative standout, in our view."
The source: S&P Global media release
