The ASX Ltd (ASX: ASX) share price is falling hard today, down 11.8% this lunch hour.
Shares in Australia's largest securities exchange closed yesterday trading for $67.54 apiece. At the time of writing, they are changing hands for $59.58 each.
Here's why investors are hitting the sell button on Tuesday.
What are investors considering today?
The ASX share price is under pressure on the back of the company's investor day presentation.
The securities exchange unveiled a new five-year strategy and provided updated financial guidance. And investors clearly have some concerns.
Among those concerns are costs.
The ASX lifted its guidance for total expenses by 12% for the 2023 financial year and by 12% to 15% for the 2024 financial year.
The company attributed the increased costs in FY23 to CHESS-related regulatory and assurance costs as well as the costs associated with a CHESS replacement solution design.
The cost blowout in FY24 comes as the company works to support its five-year 'reset' plan. The exchange also now forecasts more expenditures for ongoing regulatory and technology modernisation costs.
Also likely pressuring the ASX share price today is the announcement of a pending drop in the company's dividend payout ratio policy.
ASX shares have a lengthy track record of delivering two fully franked dividends per year. At the current share price, the stock trades on a trailing yield of 3.9%.
The exchange said it will maintain its FY23 dividend payout ratio policy at 90% of underlying net profit after tax (NPAT). But that ratio is set to decline to between 80% and 90% of underlying NPAT commencing in FY24.
The ASX also said it intends to issue corporate bonds with a value likely in the range of $200 million to $300 million in the first half of 2024.
Commenting on the developments sending the ASX share price sharply lower today, CEO Helen Lofthouse said:
We recognise there are near term, situational challenges that we must address, including our regulatory commitments and our expanded technology modernisation program.
Lofthouse noted that securing "the foundations for ASX to achieve our full potential and deliver long-term sustainable value" was a multi-year investment.
Lofthouse added:
With a strong balance sheet, leading positions in key markets and structural tailwinds, ASX has an attractive core business, and we must continue to invest in order to grow and to support the financial markets effectively.
ASX share price snapshot
Up until the opening bell today, the ASX share price was modestly in the green in 2023.
With today's big intraday fall factored in, shares are down 10.8% year to date and 25% over the past 12 months.
