ASIC finds private credit is 'good' for the economy and investors
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The news: Private credit is good for the economy and investors, if done well, according to preliminary findings from submissions into the Australian Securities and Investments Commission’s (ASIC’s) review into public and private markets.
The context: ASIC said it received around 90 submissions into its discussion paper and said responses were “overwhelmingly positive”.
The main themes ASIC found within the submissions included:
- Structural and cyclical factors are shaping both public and private markets;
- Public market adjustments would improve and enhance their attractiveness;
- Private markets are here to stay and grow, there is an acknowledgement of the need for any regulatory guidance to be measured, working closely with industry and aligning to international standards;
- Private credit is good for the economy and investors, if done well. There may be work to do to ensure it is sustainably done well;
- Superannuation is a mature investment force in Australia and a significant and structural influence in markets and investment; and
- More to do on data collection and transparency of private markets including in dimensioning the market itself and learning from international practices.
On private credit, ASIC said that while it met a real need and could complement the banking system, there “were calls for increased supervision of the Australian private credit market due to its opacity, rapid growth, and untested status in a downturn”.
What they said: “ASIC’s private credit markets funds surveillance is underway in wholesale and retail private markets to assist the agency to better understand current disclosure, distribution, conflicts of interest, valuation, conduct practices and use of ratings,” ASIC said.
“This will be supplemented by insights from industry experts to inform the actions the agency will take to maintain integrity, protect investors and promote the quality of Australia’s private credit industry.”
ASIC chair Joe Longo said: “We have noted a range of insights and actionable ideas, including streamlining IPOs and disclosure requirements.”
“...We look forward to announcing the adoption of some of the proposed actionable ideas and will share our roadmaps for public and private markets in Q3 and Q4, respectively, this year.”
The sources: ASIC media release, ASIC
