April 2 (Reuters) - The Australian Securities Exchange has an 'insular and defensive' culture that prioritised delivering higher shareholder returns over ensuring critical market infrastructure was in place, according to a new regulatory report published on Thursday.

The Australian Securities and Investments Commission's final report, following a 10-month inquiry, follows a string of blunders, cost overruns and missed timetables for technology upgrades at the stock exchange operator that have frustrated market participants, the regulator and the country's central bank.

The report, compiled by three independent business leaders for ASIC, said the ASX lacked the aspiration to be a "steward of critical market infrastructure".

The ASX was found to have adopted short-term 'tactical solutions' to solving problems rather than addressing the cause of its issues, which mainly centred on technology, the report said.

"This incremental approach, combined with an insular and defensive culture, led to a focus on meeting minimum standards rather than striving to fulfil its role in a way that best serves Australia's interests," it said.

The ASX also concentrated on delivering higher returns to its shareholders at the cost of funding long-term technology upgrades.

ASX chair David Clarke said the exchange had installed a number of new senior executives and board members to oversee an overhaul of the exchange to improve its governance, technology systems and risk management frameworks. A new chief executive is due to be appointed, with incumbent Helen Lofthouse leaving next month.

"I'm looking forward and focussed on fixing this, as is the board. The real importance of this report is that it's a mirror that has been held up to us," Clarke told Reuters.

"There has been a very substantial increase in our capital expenditure, well in excess of our peer exchanges and what they are spending.

"We're working hard to make sure that we have got a resilient and robust set of infrastructure."

ASX shares were trading down 0.3% on Thursday after earlier being up by almost 3%, while the S&P/ASX200 was down 1.1%.

In a separate exchange filing, ASX said it expected 2026 financial year expense growth of 13%-15%, excluding ASIC inquiry costs.

ASX said it would also provide a 2028 capital expenditure forecast and 2027 total expense outlook by the end of this financial year. 

The exchange's mishaps recently included a series of technical glitches that resulted in a near full-day outage in the heightened trading volume of 2020, sparking an ASIC probe at the time.

The company's ambitious, and ultimately failed attempt to rebuild its clearing and settlement software platform with custom blockchain-like technology from 2017 also frustrated market participants - and ultimately ASIC and RBA.

ASX also had a series of operational issues, including a company name mix-up in August 2025 and an outage of its announcements platform in early December last year.