Hybrids and OTC products in ASIC’s sights

Hybrids and OTC products in ASIC’s sights

ASIC has released its corporate plan for 2017-18, announcing new surveillance projects targeting the distribution of hybrid securities and over-the-counter products.


The corporate regulator has released its corporate plan for 2017-18, listing new projects as well as ongoing projects.

In the market intermediaries sector, ASIC is pursuing two new surveillance projects in 2017-18 (in addition to 12 ongoing projects targeting intermediaries).

ASIC will review the sales and distribution practices of hybrid securities, including “investors’ understanding of the risks involved”.

The regulator will also undertake a new surveillance project into the Australian over-the-counter markets.

According to the report, this will include post-trade surveillance of derivatives, futures, ETFs and Australian government bonds – as well as the development of a FX code of conduct.

The managed fund industry will be under scrutiny as well, with ASIC committing to a new project into managed investment scheme issues, including “leverage, liquidity, cyber risk, regtech, risk management, market-place lending and investment research”.

On the financial advice side, ASIC will be conducting a new project in 2017-18 looking into the effectiveness of recent reforms to life insurance, which will include an examination of data relating to life insurance policies, remuneration, lapse rates and claw backs.

Finally, ASIC will be conducting two new projects into corporations: one on the forecasts contained in IPO prospectuses and one titled ‘Why Listed Companies Fail’.

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