ASX Market Announcement - ASX Chairman's Address and Managing

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					                           MARKET ANNOUNCEMENT
23 October 2003

             ASX Chairman’s Address and Managing Director’s Presentation
                           Annual General Meeting 2003

Chairman’s Address

On 13th October 1998, five years and ten days ago today, ASX ceased to be a not-for-
profit mutual, owned by and, primarily operated for, its corporate and individual
members, to become a listed public company. The initial register of 606 broker
proprietors has grown to more than 16,500 shareholders, not one of whom is a major
broker participant. In the space of just five years, this is surely a remarkable
transformation, especially given the organisation’s historical links between broker access
and ownership.

With the benefit of hindsight the decision to demutualise may seem like an easy one. After
all, its success and clear benefit to the markets we run and Australia’s capital markets more
generally, has been manifest. But, at the time, it was a world first and full credit should be
given to those former members who showed such foresight and courage in voting to end
the mutual structure, in the full knowledge that the control they had over ASX
management and operations would be surrendered. It is this positive approach to change
that continues to keep Australia’s financial services at the leading edge.

The practical challenges brought to ASX through this decision have been profound. Many
cultural shifts have had to be managed as the company moved to for-profit status.
Customers were for the first time recognised as a vital constituency and management
devised new and innovative ways to engage them and to cater to their needs.

Greater emphasis has had to be given to cost control, resulting in costs as a percentage of
revenue declining from 84 percent in 1998 to just over 60 percent now. Based on
international benchmarking studies, ASX is among the lowest-cost stockmarket operators
in the world. Our financial management and general accounting systems have been
overhauled and significantly strengthened so as to achieve this.

Systems too, have undergone significant upgrading and expansion to meet growing
demand and changing requirements. In 1999 we introduced T+3 settlement to shorten the
time for completion of contracts, to reduce risks and, to follow best practice. In 1998 an
average of 33,000 equities trades were handled daily; now, more than 70,000 trades are

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executed. And, in addition to that, there are about as many options contracts traded every

Recognising that, in time, our traditional market operations are unlikely to sustain the
value-adding expectations of our shareholders, we took some low-risk initiatives which we
believe, over time will supplement and diversify our income streams. Among these moves
are our investment in ASX Perpetual Registrars, our registry joint venture with Perpetual
Trustees Limited, a related and strategic 50 per cent stake in Orient Capital Limited, a 15
per cent investment in IRESS Market Technology Limited and the establishment of World
Link to widen our window to the world. The equities trading link we pioneered with the
Singapore Exchange (SGX), another world first, promises both of us more than just a
common trading platform. I am delighted with our SGX relationship and management of
both companies is working on a number of opportunities, some of which may have
multilateral possibilities.

In governance too, there has been a dramatic change. From a board of fifteen directors in
1998, ten of whom were practicing brokers, today’s board consists of eight directors who,
with the exception of the managing director, are all independent and none of whom is a
practising broker.

No longer is there the unhealthy perception of management offering brokers patronage, or
brokers unduly influencing management. An independent board sets the compensation of
the chief executive which is disclosed to shareholders annually.
With the exception of a few non-operational advisory or adjudicatory panels, the
traditional broker committee structure has been effectively dismantled.

Under Board protocols, neither the Chairman nor the Managing Director may sit on the
boards of listed entities and the Managing Director may not deal in any financial product
traded on ASX’s markets, other than the shares of ASX itself.

Nor are directors any longer involved in supervision cases, except at the highest level to
make sure management in this area is appropriately resourced and policies effectively
implemented. To provide additional comfort to market users and, as a further check, the
ASX board took the initiative of establishing ASX Supervisory Review Pty. Limited
(ASXSR), with an independent board under the chairmanship of Mr. David Hoare.

ASXSR reports annually to ASX and ASIC and the report is available to the public through
the ASX website.

It is worth briefly reflecting on these tremendous changes to the way ASX is owned and
operated, because much of what has been achieved is either little understood, or, not
appreciated for the giant leap forward in governance and operational efficiency that it is.
And the fact that this has been accomplished in five years is extraordinary and says much
for the quality of management of Richard Humphry and his team. Yet despite these
significant advances we still hear occasional calls for ASX to relinquish market supervision.
These calls have gathered momentum following publicity of events overseas, even though
Australia may have been largely free of similar experiences. This tendency to draw facile
links between poor governance abroad and practices at home should not be accepted
without careful analysis. Cultures, laws and procedures around the world differ widely and
there is real danger of regulating change in Australia based on a flawed diagnosis of the

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As mentioned in this year’s annual report our elevated ranking in the Morgan Stanley
Capital International index (back to eighth in the world) is an endorsement by investors
not only of the depth, liquidity and efficiency of our markets, but also of the integrity of
the supervisory process. This is precious confirmation to us and heightens our resolve to
resist pressure to give up control of this core function. We believe trust in our market is
crucial to our commercial success and too important to be delegated to others, no matter
how diligent they may be. ASX brings flexibility and discretion to this specialist function
and those calling for change should be careful what they wish for.

This is not an abstract issue, nor a view that ASX holds without deep deliberation. Few
matters occupy the Board’s attention as often as our role as a frontline supervisor. For us,
the easy decision would be to relinquish our role in market supervision, but, whichever
way we look at it we return to the same point. If the solid reputation we have
painstakingly established over the years was to be seriously damaged, or lost, not only
would our market rating and profitability surely suffer, but so too would the cost of capital
for Australian issuers, with implications for economic growth and employment. It is a risk
that neither ASX, nor indeed the Australian public, should take.

Rather, we have concluded, it is better to stick to the present safeguards, including ASIC’s
powers of audit and ASIC and the Federal Treasurer’s direct oversight of the operations of
our markets and clearing and settlement facilities. In that way the necessary controls and
oversight of ASX management are retained while leaving us, with our accumulated
knowledge and experience, to operate the markets sensitively and effectively. This is surely
the best of all worlds.

As a last word on corporate governance and supervision, let me say that after the collective
effort which went into the publication of the ASX Corporate Governance Council
guidelines last financial year, this year, we will observe their gradual implementation. ASX
itself, like many major companies, chose to bring forward its adherence to the reporting
guidelines. Patience and some understanding will need to be shown as some listed entities,
particularly smaller ones, come to grips with the detail and practical issues. The guidelines
themselves have been designed to offer some flexibility consistent with transparency and
disclosure. Investors and analysts should avoid being overly prescriptive and remember
that the real work on corporate governance is performed in the boardroom itself. It is
culturally based. I am sure our shareholders will understand that it is not their role to get
into the boardroom but, rather, to observe behaviour and, of course, performance.

There are two vital ingredients in the success of any enterprise, neither of which can be
legislated for. They are integrity and competence. A dishonest competent company is no
more likely to succeed, long term, than an honest incompetent one. It is why we believe
that shareholders should not abrogate their individual responsibility to corporate
regulations and guidelines. The price of superior investment returns is eternal diligence.

On Tuesday we announced our trading results for the first quarter of this financial year. At
$19.4 million it is a record quarterly net profit. The result reflects the improved trading
conditions observed on most exchanges since the October 2002 lows. Time will tell
whether the unprecedented monetary and fiscal stimulus, particularly in the United States,
will create a sustainable recovery. Economic activity is improving, although, outside of
Australia, unemployment remains stubbornly high, especially for this stage of the cycle. A
notable example is the United States, where, despite the headline numbers, unemployment
continues to increase. It is this continued uncertainty, and the return of bubble valuations

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in the American stockmarkets, which makes forecasting the rest of our year so difficult,
despite the underlying strength of the Australian economy.

Having said that, our results for last year, given the write-off of the ASX FundConnect
project and, generally mixed trading conditions, were very good. They very much reflect
the success of management in holding down costs. The cost containment drive continues,
so if revenues hold, we can expect another successful year.

This year directors recommended the payment of a special dividend based on the
judgement that some of the cash was surplus to immediate requirements. This brings the
total dividends paid this year to 67.1 cents per share, fully franked, and the total amount
paid to shareholders since listing, to $275 million. The Board will continue to monitor our
cash holdings against present and future needs.

Today’s AGM is particularly notable because it will be Richard Humphry’s last as
managing director. I think shareholders will agree with me that Mr. Humphry’s
contribution to ASX throughout the ten years of his term has been extraordinary. When he
retires in July 2004, his successor will inherit a lean and effective organisation, with a
sound culture, a strong balance sheet and bottom line, and a reputation which has become
respected around the world. This is a proud achievement, the more so because he has
managed the transition from mutual to public company.

He has navigated ASX through uncharted waters and generated considerable prosperity for
shareholders along the way. Five years ago, ASX was capitalized at about $450 million.
Today, the company has a market value of around $1.5 billion. In terms of total
shareholder return, ASX has outperformed all but four companies in the S&P/ASX-100
Index in this period.

Ladies and gentlemen, I am sure you will want to join with me in expressing our
appreciation to Richard Humphry for a decade’s outstanding service and in extending to
him every good wish for a long and happy retirement.

Although Mr Humphry has committed to serving out his contract, which runs until July
2004, the Board is progressing well with the search for a new managing director. We are
fortunate to have some excellent internal candidates from whom to choose but, to ensure
we do not overlook the best possible candidate, we intend to undertake an external search
as well. An announcement of Mr Humphry’s successor will be made well before his

As well as preparing for management change, the Board has been actively planning for its
own succession.

As you are aware, over the past 15 months three directors retired and two were appointed.
The Board has pursued a policy of continually refreshing its membership while
maintaining the knowledge, experience and stability so critical to a company operating at
the hub of Australia’s capital markets. This makes it all the more important that the
process be orderly and that directors have the right mix of skills, experience and ASX
board service throughout.

One of the factors in the success of ASX as a company has been the excellent relationship
which exists between the Board and management and the keen spirit of co-operation
which prevails to ensure desired outcomes. The directors too, work well together with no

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subject off-limits. This ensures vigourous and robust discussion at the board table and a
climate which is conducive to informed decisions. It is important that these vital elements
of sound governance be preserved as the Board itself is refreshed.

I take this opportunity to again thank those directors who have retired in recent times - Mr
Clive Batrouney, Mr John Fraser and Mr Max Fowles - for their contributions to the
success of ASX. They are missed, but we know that we retain their friendship and support.
We have been fortunate in securing the services of Mr Trevor Rowe and Ms Jillian Segal,
whose background and personal characteristics will add to the strength and sound
judgement of your Board.

Ladies and gentlemen, may I also publicly acknowledge our appreciation for the
tremendous efforts of our employees, who, often beyond the call of duty, have delivered
and, continue to deliver, such outstanding results for our shareholders. And, last but by no
means least, may I thank you, our shareholders, for your trust and loyalty.

After two years of meeting our shareholders in other states, it is a pleasure to be back here
in Sydney once more, and in particular, to be in this auditorium – part of the Exchange
Centre over which, I am pleased to announce, ASX has now assumed full control for the
first time. The historical display that greeted you in Exchange Square as you arrived today
highlights the proud record of this organisation. We will endeavour to live up to that
history in to the future.

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Managing Director’s Presentation

Good morning Ladies and Gentlemen and thank you for your kind sentiment.

You have been good enough to acknowledge my contribution to ASX but I must tell you
that all that has been achieved has been through the efforts of many people. Not only by
your Board of Directors and the staff of ASX, but the efforts of many of our predecessors
over a number of years.

The integration of the six state stock exchanges into the ASX in 1987, and then
development from quite small beginnings as a mutual to an Australian Capital Market of
significant size and quality, is the result of a collective effort. ASX’s first Chairman was
Ian Roach AO who sadly passed away this year. His contribution was significant and you
may notice his photograph amongst some of the historical material displayed in Exchange
Square upstairs when we adjourn for morning coffee.

Those who developed and implemented a national trading network and automated
clearing and settlement systems did an outstanding job. It is complemented with a
supervisory framework that built the Australian market as one of high integrity.

 They were all ground-breaking initiatives. Ground breaking even by global standards.
And they laid the foundation for building the world-class financial market that we have
today, recognised as the eighth largest within the Morgan Stanley Capital International
global index.

When Maurice Newman became ASX’s third Chairman he raised with me the prospect of
demutualisation as a logical next step for the Exchange. We agreed that listing would
ensure the best governance model so that ASX would be subject to a comprehensive range
of market disciplines while transforming to a shareholder-owned for-profit company.
ASX was the first stock exchange to simultaneously demutualise and list; setting a trend
that has now been followed by 11 other exchanges internationally. I am sure that more
will follow.

The success of ASX in listing, in achieving the highest price to earnings multiple and
leading the improvement in cost to income ratios is the result of experienced and effective
directorship under the Board and your Chairman. It is also a great credit to the
management and staff of ASX who have produced growth in profits while maintaining a
strong ethical culture, reliable market infrastructure, effective market supervision and a
discipline on costs.

The composition of the Board has changed dramatically over the years, and it continues to
evolve. Under Maurice’s leadership, indeed throughout the transformation of ASX from
mutual to a listed company, the Board has consistently brought a strong mix of skills from
a wide range of professions. The Board members have a deep knowledge of the financial
markets combined with independence of judgement.
There was no textbook explanation anywhere in the world for being the Chairman or a
Director of a listed exchange – particularly an exchange listed on its own market.

However, through considered decisions based on sound judgements, the correct structures
have been put in place to manage potential conflicts of interest between the commercial
and supervisory functions of ASX.

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The result has been the successful interaction of the Board and Management working as a
team to sustain and enhance our market’s reputation for integrity, while at the same time
lifting our commercial performance, share price and market capitalisation.

Last week I attended the World Federation of Stock Exchanges General Assembly in New
York where ASX was complimented by the US Securities and Exchange Commission as an
exchange that had anticipated and correctly managed its supervision of markets. They
indicated that we and some other exchanges had correctly dealt with many of the issues
that they were now grappling with.

I would add about Maurice, in particular, that – through the many issues we have faced
together – when the time came for clear judgement and sound leadership, I never found
him wanting. He has been an outstanding Chairman for ASX and given the management
transition that lies ahead, his commitment will ensure the company’s continuing success.

 • Financial performance

 • Growth and change in capital markets

 • Our shareholders

 • A strong platform for the future

This morning I would like to discuss some of the forces and events that have shaped and
continue to shape the environment in which ASX operates. First, however, I would like to
brief you on the results and achievement during the 2002/03 financial year.

 2002/03 results and achievements
 • Record revenue of $206.8m, costs flat at $127.3m*
 • Profit of $61.3 million*
 • Total dividends 67.1 cents per share fully franked
       – Interim dividend 21.5 cents
       – Final dividend 18.1 cents
       – Special dividend 27.5 cents
 • Continued operational reliability
 • Reduced capital expenditure
 • Corporate Governance Council guidelines
 • Regulatory and structural reform
 • Educational programs and partnerships

 *excludes ASX FundConnect write off

Despite uncertainty in markets worldwide and relatively flat market volumes throughout
the last financial year, we managed to maintain our revenues at record levels. This was
also despite the slowing of new listings and corporate activity. At the same time we kept
our operational costs flat despite absorbing external supplier cost increases and inflation.

This resulted in a record operating profit of $61.3 million.

Given this resilience in our revenues, ASX was accumulating cash beyond that required to
meet short-term calls on clearing and settlement exposures, which is presently around $50

                                                                               Page 7 of 13
As a result the Board determined to distribute a special dividend in addition to the final
dividend making a total of 67.1 cents for the year, representing a yield of approximately
5% on the share price at the end of the year.

The share price as you know has continued to rise in the first quarter this year as market
activity has picked up significantly. Just on Tuesday we released our first quarter profit
that reached a new record level of $19.4 million. You may be interested to know that the
volume of shares traded in each of July, August and September this year is the highest ever
for those months. It is to be hoped that this trend continues but we must be careful in
projecting future volumes, as markets are always somewhat unpredictable.

Our Market Services and Production Services Divisions led by Michael Roche and Jeff
Olssen have managed these volumes without any increase in resources and at 100%
operational efficiency. Initiatives have also been taken to establish new markets in
agricultural futures products and to offer some technology facilities services in order to
enhance our future profitability.

We have significantly reduced our demand for capital investment in technology and
infrastructure, which had run at an annual rate of between $25 and $30 million for several
years. The past two years ASX has had capital investment of just $8 million and $10
million. This level should be sustainable under our present configuration and will deliver
increased profit progressively from 2005 through a declining depreciation and
amortisation charge. This also contributes to an increase in cash holdings through lower

During the year we had to take a major initiative to re-develop ASX Corporate
Governance Guidelines for listed companies. ASX had already required all listed
companies to report at least annually on their corporate governance practices. However,
convening the Corporate Governance Council has allowed an articulation of principles for
current business conditions with contributions from all relevant groups. If we had not
done so it is likely that Government would have had to consider legislation along the lines
of the Sarbanes Oxley legislation introduced in the US.

While well intentioned, legislation is often a cumbersome and inflexible solution that is
fixed and difficult to change. Our Guidelines offer an effective solution and can be kept
under review as new issues arise.

Despite some grumbling, Companies are responding well and we will specifically monitor
the responses from next financial year. ASX is now focussed on assisting Companies in
meeting their reporting obligations. I am very pleased with the efforts of the Council,
chaired by our Executive General Manager responsible for Issuers and Market Integrity,
Karen Hamilton, in developing the Guidelines and in achieving a consensus from 20
industry groups with quite different priorities and agendas.

Our General Counsel, Christine Jones and her legal department have worked closely with
our Clearing and Settlement division, led by Chris Hamilton, in establishing the regulatory
framework necessary to meet new financial services reform act requirements that will
become effective in 2004. ASX has taken the opportunity to undertake a structural review
and enhance our market framework to position the business for future opportunities in
new products and wider clearing operations.

We have also broadened the reach of our educational programs including new partnerships

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with the Channel 9 Money Expos and Telstra Countrywide for our regional education
roadshows. Our interactive educational programs have been expanded and are delivered
through our website free of charge.          Our website also broadcasts all company
announcements and share prices in the interests of maintaining a fully informed market.
The enthusiastic response from the public is a measure of the interest in markets by the
Australian public, with nearly 14 million page impressions being viewed online last month.
These activities under Stephen Mills enhance our brand and underpin future growth in
investment activity.

All of these activities enhance your company’s profitability through sustaining and growing
revenue opportunities and market capitalisation, now at $1.5 billion from our beginnings
at around $400 million.

      Financial performance
                     Operating Revenue                                                             Cost to income
  $110                                                                                      95%

      $80                                                                                   75%

      $70                                                                                   70%

      $40                                                                                   50%
                   1H98   1H99     1H00          1H01      1H02        1H03                        1H98      1H99      1H00     1H01     1H02     1H03

                     Earnings per share                                                               Return on equity



                                                                                                      FY98      FY99     FY00     FY01     FY02     FY03
                   1H99     1H00          1H01           1H02          1H03

If we look at financial performance during our time as a listed company you can see that
the trends have remained positive. Our revenue has grown to the extent that our revenue
every six months now exceeds the revenue ASX earned each 12 months a decade ago.

The cost to income ratio has improved markedly to about 60% at June 30, and we are
now running well below even that level. When we demutualised we spent 80c in every
revenue dollar in maintaining the company. Now, with fewer staff and a more
streamlined organisation, the ASX is maintaining a much larger market with a significantly
enhanced range of products at a lower relative cost. Earnings continue to trend upwards
and our return on equity has now reached more than 30%.

These are all excellent results that we are committed to improving in the future.

      Capital market size
                                          Market capitalisation (LHS)                   Marke t cap to GDP (RHS %)

                   800                                                                                                                     120%

                   700                                                                                                                     110%

                   600                                                                                                                     100%

                   500                                                                                                                     90%
       $ billion

                   400                                                                                                                     80%

                   300                                                                                                                     70%

                   200                                                                                                                     60%

                   100                                                                                                                     50%

                     0                                                                                                                     40%
                          1994     1995           1996          1997          1998   1999         2000       2001       2002      2003

Your company’s success is closely tied to the development and growth of Australia’s capital
market. Market capitalisation of the Australian market has grown nearly three fold during
the past decade. More impressive has been the growth in capitalisation against the growth
of Australia’s national GDP. In 1994 market capitalisation was just 55% of GDP, but in

                                                                                                                                                           Page 9 of 13
2001 peaked in excess of 100%.

This underscores the importance of capital markets as a primary source of funding for
businesses to grow, expand and invest in new markets and new products. This virtuous
cycle contributes to a lower cost of capital for companies and fuels investor confidence in
the market mechanisms, and of course increases ASX revenues.

It is therefore crucial that your Board and Management effectively sustain and grow our
capital markets in order to continuing facilitating the capital rasing process which
contributes so significantly to economic activity and job creation. The overall size, depth
and liquidity of our markets are now significant by world standards. And if we continue to
ensure our reputation for market integrity, the Australian markets should continue to grow
into the future.

 Capital markets
  Equity capital raisings







             1993    1994   1995     1996     1997       1998   1999       2000   2001    2002   2003

        Floats                 Privatisations              Rights                   Placem ents
        Calls                  Options e xercis e          Share plans              DRPs

It is interesting to examine the source of capital for companies to undertake those
expansionary activities. We can see from the chart that despite two relatively low years
for equity capital raisings, that the levels remain above those of the mid-1990’s.
Privatisations too, were a major driver in the late 1990’s for new capital to the markets.

However the increasing amount of capital coming into companies from dividend
reinvestment plans and employee share plans emphasises the confidence which investors
and employees place in both the management and boards of our listed companies. In the
last two years these have contributed between 15% and 20% of equity capital raisings.

In the interests of further assisting companies with capital raising requirements, earlier this
week we released an exposure draft for new listing rules in this area. We look forward to
the feedback from all market participants.

 Australian participation                                                                  50% of adult
                                     Total Shareow ner ship


                                                  13%               12%
       30%                                                          18%
                 14%                              25%                              19%
       10%                                                          22%            18%
                                17%               16%
                 1997          1998               1999              2000           2002
                            Direct only     Direct & Indirect   Indirect only

  Average number of holdings                               Average value of direct investment
      1998 = 3                                                 1997 = $28,562
      2002 = 6 (+100%)                                         2002 = $35,800 (+25%)

At the same time shareholder participation in Australian markets reinforces this message of
confidence. Despite the level of shareholders being marginally below the peaks of 2000,

                                                                                                          Page 10 of 13
there are still more than 50% of adult Australians choosing to invest their discretionary
savings into the markets.

Despite three years of subdued returns Australian investors have doubled the average
number of holdings in their portfolios from 3 to 6 and also increased the average value of
their portfolios by 25%. As a measure of the sophistication of Australian investors, we
now know that they did not exit the market in the recent downturn, with many of them
choosing instead to hedge their investment with derivative products and in particular, with

  Our shareholders




             Former             Australian          Australian           Overseas       ASX Employees
            m embers           Institutions          Private

 As at 30 September 2003, Private investors includes self managed superannuation

Another interesting indicator is the split of investors in ASX itself. It is particularly
pleasing to see so many private investors, in excess of 16,000, who have taken an interest
in ASX. They dominate our share register along with domestic fund managers and in time
will continue to grow, particularly as former members continue to reduce their holdings.

The Australian Stock Exchange has shaken off the old and in many respects incorrect
image of a club, and is now an Australian company owned by the Australian public.

  Infrastructure initiatives
  An active cycle of investment for the future
                                                                                                   Trading system
                                                   Capacity upgrades
                                                                                                    design study
           OM ‘Click’ -             Derivatives                                    APRL registry
           Derivatives            Clearing System                                    system*

 1997                               1999                                   2001                          2003

                  1998                                   2000                               2002

SEATS rebuilt                            Y2K                ASX WorldLink                  In-source facilities

  * Built by ASX under contract for APRL

ASX’s commitment to market infrastructure extends beyond the regulatory and
supervisory framework. A philosophy of continual investment underpins our technology
operations. ASX has a track record of developing innovative and effective technology

In part that reflects our leadership, with SEATS the first national electronic market,
CHESS, our clearing and settlement systems, and our options market the first to trade
electronically anywhere in the world.

Increasingly these systems are available from a competing range of suppliers and ASX is
more likely, in the future, to license software from system vendors than undertake a costly
and lengthy exercise to build our own systems.

                                                                                                                    Page 11 of 13
Over this year ASX will evaluate whether to combine its equity and derivative market
terminals with new software on the market but in close consultation with its customers. As
a policy, ASX will continue to operate these systems in-house as they represent our core
business and we can ensure reliable and consistent performance together with lower
operating costs.

Capacity is the other major investment that ASX has pursued in recent years, ensuring that
we can manage any foreseeable rise in trading activity and supply large quantities of
information to investors through our website.


Another key pillar for ASX into the future is our market supervision.

Market supervision in Australia is part of a co-regulatory framework that has both served
the markets well and continued to evolve as needed. It ensures that supervision is
responsive and flexible in the ‘front line’, while the regulator effectively manages

Under the financial services legislation, ASIC is required to conduct an annual audit of
ASX’s supervision. The first ASIC audit, released earlier this year, concluded that ASX
operates a market of high integrity.
This is in addition to ASX’s own supervisory review and the accountability to Parliament
through senate committees of review.          So ASX remains fully accountable for its
supervisory functions to the Australian Parliament.

This is important to ensure both continuing rigorous supervision of the markets, but also
to provide transparency and assurance that everything is being done as it should be done.

Again, this function underpins market confidence with a flow-on commercial benefit to
your company.

 A sound platform
 For now and into the future

 • High standards of corporate governance

 • Stable and capable management

 • Robust technology infrastructure

 • Effective regulatory framework

 • Flexible strategy with continuity in execution

                                                                             Page 12 of 13
I would like to close with the message that ASX is in good shape. It has come a long way
but the journey is just beginning. The Board, management and staff are all committed to
growing the business and delivering the best possible returns for shareholders.

The governance standards are high and the Board has willingly undertaken the most
rigorous assessment of its arrangements and practices this year since demutualisation.
Management has a strong track record and brings stability in an important year of
transition. Our technology is stable, efficient and reliable. I would be remiss if I did not
make particular mention in this context of Angus Richards, my deputy, and Colin Scully,
our Chief Operating Officer, whose deep knowledge of our markets and understanding of
our systems has ensured that ASX operates smoothly.

I want to remind you all that I will not be leaving until July next year and there is still
much to achieve in the relatively short time left to me. I can assure you there will be no
lessening of pace by management. However, as this is the last time I will address
shareholders, I wished to take this opportunity to thank you for your support and
confidence in this great Australian company.

Thank you- and I look forward to attending your AGM in 2004 as a shareholder of ASX.

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