In a progress update on Monday, the regulator said responses to its February discussion paper on evolving capital markets underscored the “importance of public markets – and confirmed that although Australia has strong regulatory and governance frameworks that are relatively attractive to companies and investors, there are areas for improvement”.
“We heard that certain disclosure, governance and other regulatory settings for listed public companies are impacting the appeal of listing or remaining listed in Australia, and we received a range of ideas for change,” ASIC said.
The corporate regulator has already moved to accelerate initial public offerings by allowing earlier engagement with issuers and streamlining review processes.
It has also launched an inquiry into the Australian Securities Exchange’s governance and risk management practices, and is considering reforms to pre-prospectus advertising, prospectus length, trading plans and sell-side research.
“Some policy-related ideas extend beyond ASIC’s remit or powers in relation to governance, disclosure and listing requirements. We are also liaising with peer agencies and market operators on other ideas – including reviewing listing rules – and will provide a further update in November,” ASIC said.
At the same time, ASIC published a commissioned paper into private credit funds, estimating the domestic sector at about $200 billion, with roughly half tied to real estate-related assets.
The paper identifies both “better and poorer practices” across areas including valuations, liquidity, disclosure, conflicts of interest and related-party transactions, and will feed into the regulator’s ongoing surveillance of the sector.
Early findings from that surveillance “align with the better and poorer insights from the paper – particularly those relating to valuations, liquidity and transparency”, ASIC said, adding that some practices were potentially inconsistent with financial services law.
“We do not hesitate to use ASIC’s regulatory and enforcement tools when we identify misconduct,” the regulator said.
The regulator has already issued interim stop orders against RELI Capital Mortgage Fund and La Trobe Australian Credit Fund products, citing deficiencies in their Target Market Determinations (TMDs).
“We have also commenced enforcement investigations for instances of more egregious conduct,” the regulator disclosed on Monday, but without revealing further details.
Looking ahead, ASIC said it will provide a major update in November, including consolidated findings from its private credit surveillance across retail and wholesale funds, guiding principles for compliant conduct, and a forward roadmap for industry standards.
“We will also provide a set of guiding disclosure and conduct principles outlining how private credit can be done well,” it said.
The regulator will also release an expert report on the future state of Australia’s capital markets, alongside an international comparison of private market transparency and data reporting, and an “easily referenced regulatory guidance catalogue for the funds management sector”.
