Among other things, the committee encouraged the Australian Securities and Investments Commission (ASIC), along with the Reserve Bank, to “end the chaos” regarding the high-profile complications seen with the ASX’s CHESS system.
With both ASIC and the RBA having taken regulatory action against ASX for its clearing and settlement system in recent years, the committee gave the regulator the green light to take “whatever steps are necessary” in its interventions.
Noting that the system continues to experience significant errors and outages, the report reads: “The committee considers it vital for Australia’s stock exchange to be trusted by market participants – and trustworthy.”
This comes after a Senate inquiry into problems with the CHESS project delivered its final report last April and found that both ASIC and the RBA should have been more vigilant.
“The committee will continue to be interested in ASIC’s work using its expanded powers to oversee and intervene in the ASX.”
Expounding on the findings of the ASIC review report, committee chair Dr Daniel Mulino conceded that ASIC had been subject to parliamentary scrutiny in recent years, including by other committees.
“Similar to our colleagues on the parliamentary joint committee on corporations and financial services, the House economics committee asked extensive questions about ASIC’s enforcement approach,” Mulino said.
Moreover, the report acknowledged the challenges that the regulator faces in triaging thousands of complaints and tip-off’s annually. Nonetheless, Mulino reaffirmed the committee’s expectation that ASIC seek to better communicate with those Australians who do reach out for help.
Expounding on the intervention powers granted to ASIC following the Hayne royal commission – including step-in powers to block poorly targeted financial products – the committee’s feedback was also positive.
“The committee was pleased to see early signs of success from ASIC’s use of the new powers, and we encourage ASIC to continue using these new tools judiciously to prevent and take action against wrongdoing,” the chair said.
Other issues that the committee discussed included:
- Whether superannuation funds are correctly valuing their increasing holdings of unlisted assets, and the implications for financial stability – with ASIC advising that APRA is leading work on this issue.
- ASIC’s challenges attracting and retaining talent and the organisation’s internal capability uplift work generally.
- ASIC’s reporting on the big four banks and other large institutions, and considerations when deciding whether to identify individual entities.
