ASIC has released a report covering issues in regard to market integrity for the period 1 July 2017 to 31 December 2017. The focus of the report is to demonstrate ASIC’s work to ensure Australia’s markets operate in a fair and efficient manner.
The report summarises the following enforcement actions:
- Two criminal actions including one person being jailed.
- Four enforceable undertakings.
- Ten infringement notices.
- $1.403 million of infringement notices.
- Four people disqualified from providing financial services.
ASIC has been involved in the following activities:
In October 2017, ASIC finalised the client money rules which will commence on 4 April 2018. These new rules which will impose the additional requirements on those licensees who hold derivative retail client money, cover the following:
- Record Keeping and Reconciliations.
- Supervisory Policies and Procedures.
Please click here for my earlier analysis of the client money rules.
Sell Side Research
In December 2017, ASIC released Regulatory Guide 264, which provided guidance on sell side research. Its purpose is to provide clarity in regard to:
- Managing conflicts of interest at each stage of a capital raising transaction.
- Identifying and handling inside information by research analysts.
- The structure and funding of sell-side research teams.
NSXA Listing Standards
Following a review of the listing requirements of the National Stock Exchange of Australia Limited (“NSXA”), ASIC noted that there was a lack of compliance with its statutory obligations. Principal concerns were in regard to the rationale for certain foreign listings as well as the fact that there was a disproportionately large amount of trades occurring off-market following thin on-market exchange trading.
ASIC is proposing the following measures to ensure financial markets remain fair and efficient:
- Consolidating the existing Market Integrity Rules.
- Consulting on a new financial benchmark regulatory regime.
- Providing guidance in regard to licensed exchanges seeking to admit exchange traded products.
- Consulting on a revised licensing regime for domestic and overseas market operators.
In November 2017, ASIC released a report on the cyber resilience of over 100 organisations in the financial sector. The report was designed to:
- Raise awareness of cyber risks.
- Highlight existing good practices and areas for improvement.
- Monitor and assess the cyber preparedness of financial markets firms.
In November 2017, ASIC accepted an Enforceable Undertaking from Foster Stockbroking Pty Limited about concerns of its management of conflicts of interest in regard to the organisation’s capital markets and research businesses.
- In November 2017, ASIC accepted Enforceable Undertakings from ANZ and NAB in regard to their roles in seeking to influence the Bank Bill Swap Reference Rate (“BBSW”).
- In December 2017, MG Responsible Entity Limited was found to have failed to properly disclose price sensitive information to the market, contrary to the continuous disclosure obligations of the Corporations Act 2001 (Cth). As a result, the organisation was fined $650,000.
- In August 2017, ASIC published details of its review of binary trading apps. ASIC noted that 330 apps were deemed to be offering financial services without being properly licensed. In addition, many of the apps had descriptions which were misleading or did not contain appropriate disclosures and warnings. After being contacted by ASIC, both Apple and Google removed such apps from their stores.
ASIC has advised that it intends to focus on the following risks for 2018:
- Technology and cyber resilience.
- Market conduct.
- Effective capital markets.
Should you have any queries about ASIC or other issues involving compliance, licensing, or corporate governance, please contact Jeremy Danon, director of Ariel & Associates Pty Ltd on (02) 8223 3355 or at firstname.lastname@example.org.