On Thursday, the Australian Securities and Investments Commission (ASIC) announced it will enhance its oversight of public and private markets, as well as emerging financial products, by adding these areas as a new pillar of its expanded strategic priorities.
In its latest corporate plan for 2024–28, it said reviewing the growth of private markets, which have traditionally been shrouded with opacity, will form a key part of its upcoming activities.
The review, which is expected to take at least two years, will see the corporate regulator examine changes in public and private markets, including the significant growth of private markets and the implications for the integrity and efficiency of public markets.
“Trust in the financial system and markets means greater confidence which means more investment. That has direct benefits for the jobs and opportunities of Australians,” ASIC chair Joe Longo said.
“While Australia’s private markets are dwarfed in size by our listed equity markets, their opacity presents an outsized risk to market integrity, particularly as more investors become exposed.”
Assets under management in Australian-focused private equity funds have nearly tripled in size since 2010 and stand at around $66 billion, according to a report published by the RBA in April.
The addition of a new strategic priority to delve into private markets, Longo said, “puts all market participants on notice”.
ASIC’s latest move follows news last month that the corporate regulator has ramped up scrutiny and set up a dedicated task force to survey the sector.
“As we see more and more activity in the private market, the question I have for myself and for ASIC is: what is happening here?” Longo said at an industry event in July.
“It’s less transparent – should we be worried about conflicts of interest and valuations?”
Noting that by “nature”, private markets lack transparency, Longo at the time flagged the regulator’s need to “understand better what’s going on there”.
‘Evolving and adapting’
ASIC’s 2024–28 corporate plan also highlights its growing interest in digital assets.
Namely, the plan details the creation of a central coordination function to monitor and engage entities on digital assets, tokenisation and decentralised finance. The expected time frame for this activity is two years+.
Moreover, ASIC said that subject to the passage of legislation, “we will enhance guidance and processes in how we supervise financial market infrastructure providers’ conduct”.
The regulator also plans to “create clearing and settlement service rules to support ASX in fostering competition for clearing and/or settlement”.
“These rules will aim to facilitate outcomes that are consistent with those that are expected in a competitive market for clearing and settlement services.”
Notably, ASIC commenced court proceedings against the ASX earlier this month, alleging that the exchange allegedly made misleading statements related to its Clearing House Electronic Subregister System (CHESS) replacement project.
“These rules will aim to facilitate outcomes that are consistent with those that are expected in a competitive market for clearing and settlement services,” ASIC said.
“While the overarching themes of our existing strategic priorities remain consistent, our updated Corporate Plan demonstrate how we are evolving and adapting to the changing needs of our operating environment,” Longo said.
Summarising the regulator’s achievement to date, Longo said that in the last year alone, ASIC commenced around 170 new investigations – an increase of about 25 per cent. It also saw a 27 per cent increase in civil proceedings, filing 33 new proceedings in the Federal Court.
“Our investigations have led to 18 criminal convictions and seen a further 23 individuals charged by the Commonwealth Director of Public Prosecution for criminal offences,” Longo said.
“Our latest Corporate Plan and strategic priorities represent the next step of ASIC’s transformation journey to being a modern, confident, and ambitious regulator.”
