This was published 11 months ago
Shares in stock market operator ASX Limited have taken a beating after it said it will cop extra costs of up to $35 million, with the bad news coming on the heels of an embarrassing $400 million mistake involving TPG Telecom, and the Labor government opening the door for a challenger to set up shop.
The ASX said on Thursday that it would incur an extra $25 million to $35 million in costs because of an inquiry from the corporate regulator into its governance and operational problems. The news sent ASX shares tumbling, closing 9 per cent weaker at $64.22.
The announcement capped off a horror 24 hours for the company, with questions still being asked about how it mistakenly tied an announcement from private equity giant TPG Capital to telco TPG Telecom. The error sent TPG Telecom’s share into a spin, wiping some $400 million off the telco’s valuation.
While the ASX has said publicly that all the incorrect trades had been reversed, TPG Telecom’s executives are fuming, according to a source close to the matter speaking confidentially, and are considering their legal options.
“The ASX is supposed to uphold integrity of the markets, but their actions misled investors,” the industry source said.
“The ASX’s processes for governance, accountability, judgment and integrity are completely broken. The whole palaver could have been avoided if ASX clarified and corrected straight away, but for whatever reason they decided not to, and allowed trades to occur based on wrong information.”
A TPG spokesman said: “The ASX’s mishandling of a straightforward and easily correctable error resulted in a serious and damaging failure that has negatively impacted TPG Telecom and its shareholders.”
The ASX’s headaches on Wednesday were further compounded by news that the corporate regulator, ASIC, was close to signing off on American giant Cboe conducting sharemarket listings of companies in Australia, posing a direct threat to the ASX.
The ASX, which has been embroiled in the fallout from the failure of a big technology project, is effectively the only option for private companies looking to float on the Australian sharemarket. If ASIC gives the green light to Cboe to conduct new listings in Australia, the government expects this would leave the ASX facing more competition in the market for initial public offerings.
Tale of two TPGS
The TPG bungle began at 9.20am on Wednesday, when Sydney technology firm Infomedia released an ASX statement that private equity giant TPG Capital was buying the company. The ASX incorrectly linked TPG Telecom’s ticker code, TPG, to the announcement, introducing false, price-sensitive information into the market under the wrong company.
It’s a move that the ASX says was a case of inadvertent human error, but it could have lingering implications for TPG Telecom investors and for trust in the ASX’s processes, which was already at a low ebb.
Six minutes after the announcement, TPG Telecom executives rang Infomedia, asking its executives to urgently engage with the ASX and remove the TPG cross-reference from the announcement. Infomedia then alerted the ASX and advised TPG Telecom it was an ASX error.
At 9.45am, TPG Telecom executives spoke with the ASX, which acknowledged the error and said it would correct it. TPG offered to issue a correction, but ASX executives said they would fix it themselves.
They didn’t. When the market opened at 10am, shares in TPG Telecom immediately crashed, falling 5.09 per cent to a two-month low. Some $400 million was wiped from the telco’s valuation.
The ASX placed TPG Telecom into a trading halt at 10.15am, while the erroneous announcement remained visible for another hour. A formal correction wasn’t issued until 11.31am, over two hours after the initial error.
It was at 12.27pm that the ASX lifted the pause, and TPG Telecom started trading again. Despite the ASX ultimately cancelling the trades that were made before the pause, TPG Telecom’s shares finished the day 5.1 per cent lower.
ASX chief executive Helen Lofthouse rang TPG Telecom CEO Inaki Berroeta on Wednesday evening to apologise, in a call described as cordial. ASX group executive markets and listings Darren Yip also apologised for the series of events in a statement earlier in the day.
He said the ASX “moved quickly to address the issue” – an assertion contested by TPG Telecom – and that shares in the company traded for about 15 minutes after the market opened before trading was paused.
“This issue arose from an inadvertent human error and I recognise that it has caused disruption for TPG Telecom and its investors. Upon discovery of the error, it was escalated to me and I will be apologising directly to the team at TPG Telecom,” he said.
An ASX spokesman said on Thursday: “We have been in contact with TPG Telecom including with their CEO to apologise for the mistake. We’ve also said we were open to take more questions from TPG Telecom and to give them further detail around the event. We were also in contact with them today.”
The latest mistake is another blot on the ASX, which is already facing a probe by ASIC into other governance and operational failings, including a lengthy outage in December 2024.
The costs associated with the ASIC probe have started to balloon, with the company now expecting to absorb an extra $25 million to $35 million in costs.
The slip-up could not have come at a worse time for TPG Telecom, which had been spruiking a $3 billion capital return to investors on Tuesday, and leading a renewed charge against long-time rivals Telstra and Optus.
Robert Millner is the chairman of Soul Patts, which is one of TPG’s largest investors. He called the stuff-up “ridiculous”.
“There has been a continuing saga within the ASX. These things shouldn’t happen, particularly with the technology we’ve got,” he told The Australian Financial Reivew. “Strewth.”
Additional reporting Clancy Yeates.
David Swan is the technology editor for The Age and The Sydney Morning Herald. He was previously technology editor for The Australian newspaper.Connect via X or email.