Supervising the integrity of Australia’s equity markets is one of ASIC’s most important functions, according to ASIC chair Joe Longo.
“A clean market that is fair, orderly, and transparent is critical to an efficient economy,” Longo (pictured above) wrote in an opinion piece first published in ASX’s Listed@ASX magazine.
A clean market facilitates Australian businesses in raising capital, managing risk, and gives investors the confidence to participate, he said.
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Longo said Australians and listed entities should rest assured that ASIC continues to have one of the cleanest equity markets in the world. The regulator’s latest work to measure equity market cleanliness is nearing completion, and more will be revealed in the weeks ahead.
“ASIC has been actively targeting insider trading through our new award-winning system which automatically hunts for and detects suspected market misconduct,” Longo said.
“These measures will enable us to enhance our capability, for example, to detect other forms of insider trading not driven by announcements, such as front running,” Longo said.
To avoid insider trading and breaching disclosure obligations, entities must ensure their controls are appropriate and meet legal and regulatory requirements.
“Leaks of this kind undermine market integrity and may negatively impact the value of securities as well as the attractiveness of Australian markets as a place to raise capital and transact,” Longo said.
Entities should have formal leak policies and proper controls to limit access to confidential information.
ASIC is expanding its focus to respond to changes in the structure of capital markets, including examining debt markets during market cleanliness work.
“A reduction in the number of large, strong-performing listed entities limits opportunities for Australians to participate directly in the potential future success of Australian companies,” Longo said.
This dynamic may pose risks to equitable participation by smaller investors.
ASIC is committed to ensuring that Australia’s markets remain among the cleanest and most transparent in the world, Longo said.
“This requires collaborative effort on the part of ASIC, market operators, listed entities, and market participants,” he said.
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