ASIC proposes 'light-touch' private market data reforms
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The news: The Australian Securities and Investments Commission (ASIC) has made four proposals to enhance transparency in private markets as part of its roadmap for private and public markets for the next 12 to 18 months.
The corporate regulator also published its surveillance on private credit which looked at 28 funds and said there was “the need for significant improvement in practices in the private credit sector”.
The details: ASIC said its private market data proposals were “light-touch, proportionate, and aligned with international best practice”.
The proposed options included:
- A voluntary survey of private capital funds;
- A risk-tiered reporting regime for larger and high-risk private capital funds;
- An annual ‘state of the private capital funds management sector’ report; and
- Work to strengthen governance, standardisation and data sharing.
ASIC said the reforms were “unlikely to inhibit industry innovation”, and if co-designed with industry they “could support innovation and enhance market confidence”.
However, legislative changes would be needed to enable mandatory reporting for risk tiered funds.
On its private credit surveillance ASIC provided examples of good and poor practices from the 28 funds including disclosure and transparency, marketing and distribution, fee and income transparency, governance and conflict management, valuation practices, liquidity management practices and credit risk management practices.
While it named the funds involved in the surveillance it did not name and shame any funds. The funds involved included those from providers such as Metrics, Woodbridge, Balmain, Challenger, Ares, MA Financial, La Trove, Alceon, RAM, Pengana, Hamilton Lane, RELI Capital, Corval Avenue, Truepillars, Aura, KKR, Ark, CVS, Gemi, MaxCap, Pallas Capital, Qualitas, Remara, and Revolution.
On private credit, ASIC said its focus next year would be on fees, margin structures and conflict-of-interest management in wholesale private credit funds, including those with a focus on real estate lending; and distribution of private credit funds to retail clients through direct and advised channels.
The private markets roadmap includes:
- Further surveillance of the funds management sector;
- Surveillance of audited financial reports of private companies;
- Taking enforcement action; Issuing a regulatory catalogue to summarise fund managers’ legal obligations and related ASIC guidance;
- Refreshing the funds management regulatory guidance;
- Updating its guidance on conflicts of interest;
- Updating its information sheet on licensing requirements for trustees of unregistered managed investment schemes;
- Engaging with government on policy and potential legislative reforms for wholesale fund managers and the wholesale client definitions; and engaging with industry bodies on their work to life private credit sector practices.
The public markets roadmap includes:
- Focusing on transaction and supervisory work on financial reporting and audit reviews, whistleblower compliance, and exploratory work on cleanliness indicators in bond markets;
- Foster competition and innovation;
- Streamlining the initial public offering process; Updating and reviewing its regulatory guides;
- Inquiry into ASX;
- Re-considering policy to streamline dual listings;
- Engage on the corporate governance framework; and Consider the one-size-fits-all approach for listed entities.
Other areas ASIC also included in the roadmap include:
- Initiating a data gathering pilot for FY26-27 for a small sample of retail and wholesale funds; and
- Superannuation — market conduct and integrity; financial reporting and audit; investment disclosures; and platforms and high-risk super switching.
What they said: “We've learned just focusing on poorer practices for a moment, there are some significant players in the private credit sector in Australia, where some of them, we haven't been entirely happy with some of their practices,” ASIC chair Joe Longo said during a media briefing.
“So, we will be focusing very much on them in the next six months or so to see whether the issues we've raised coming out of the surveillance with them are being addressed. If they're not being addressed, they can, frankly, assume they will be taking more targeted enforcement action.”
When asked by Capital Brief on what kinds of funds the proposal for a risk-tiered reporting regime would be targeted, Longo said ASIC would be calling for registration of wholesale funds above a certain value.
“We don't have, at the moment, a requirement to notify us of significant corporate events, for example, when redemptions are halted, which tends to be a material event, that there's no requirement to let the regulator know of that kind of event,” Longo said.
“So the sort of additional data or transparency we're talking about would be objective. It would be across all retail and wholesale funds.”
The source: ASIC
