ASIC’s private markets response: time to set course

Private credit (especially in the real estate sector), valuation governance, wholesale fund settings, and data collection and transparency. These are the focal points of a substantive private markets agenda set out in ASIC’s much anticipated ‘Advancing Australia’s evolving capital markets: Discussion Paper Response Report (Report 823, November 2025)’ released on 5 November 2025[1].

Report 823 is not a legislative instrument (and carries no regulatory force) of itself—rather, it records ASIC’s findings, articulation of key principles and supervisory expectations, refreshed guidance, and targeted initiatives in relation to the capital markets.

This alert sets out our key takeaways from Report 823 for our private capital sponsor clients. The short summary is that the direction of travel is clear: stronger conduct expectations, more consistent disclosure requirements, closer scrutiny of conflicts and valuations, and a progressive shift to recurrent fund‑level reporting beginning with pilots.

On the whole

The ASIC findings on private markets, and its 3 key areas of future focus, broadly align with expectations. It comes as no surprise that its central focus is private credit, particularly retail‑facing funds (and then particularly those retail-facing funds pursuing investment in the real estate sector).

While much detail remains left to be elaborated, the findings and reform agenda do consider global practices and are otherwise relatively measured ― ASIC has clearly taken steps to educate and inform itself on the operation of the private markets since receiving industry submissions in response to its February 2025 discussion paper.

For those market participants that already hold themselves to global standards, the impact of the reform agenda should not be profound. For most part, more evolution than revolution. With the exception perhaps of the focus on data collection and transparency, which has the potential for adversely impacting the market—and is where we think continued advocacy needs to be directed to ensure that such collection is targeted and purposeful (and not duplicative of reporting that is already being provided by market participants in Australia, or that is more extensive or invasive than international participants already provide in other jurisdictions).

More specifically

In the period since its February 2025 discussion paper, ASIC’s diagnosis of Australia’s private markets can be distilled as follows:  

1. Rapid growth, limited visibility. ASIC recognises private markets as critical to capital formation and productivity but highlights material blind spots in regulatory visibility. Australia’s framework lags peer jurisdictions: much of the current reporting is entity‑level, retrospective and not machine‑readable, leaving gaps on leverage, liquidity, valuation methods, concentrations and interconnections. A FY26–27 pilot will test “collect‑once”, machine‑readable templates; ASIC is advocating wholesale scheme notification with recurrent fund‑level reporting. Map internal data and build digital reporting capability now.
2. Private credit (and weighting to real estate) as higher risk. Surveillance of retail‑facing and wholesale private credit funds identified inconsistent practices in governance and transparency, fee and margin treatment, valuation methodologies, conflicts management, and liquidity and credit risk controls. ASIC considers the sector immature and untested in stress. ASIC specifically calls out the heavy weighting to real estate lending, with a significant share in higher‑risk construction and development. ASIC considers this concentration, coupled with opaque disclosures and valuation variance, increases vulnerability in stress scenarios.
3. Valuation governance needs attention. ASIC (and APRA, via superannuation reviews) found insufficient audit evidence and inconsistent approaches to valuing unlisted assets. ASIC is signalling higher expectations for valuation policies, independence, frequency, documentation and disclosure, including for trustees relying on external managers. For superannuation trustees allocating to private credit real estate strategies, ASIC and APRA have identified gaps in valuation governance and liquidity risk management. Both consider reliable valuations, effective disclosure, and robust oversight of external managers to be central to protecting member outcomes.
4. Conduct and conflicts standards require improvement. ASIC’s market cleanliness work now extends into private markets (including take‑privates). It has observed weaknesses in managing confidential information and conflicts across corporate transaction activity and expects robust firm‑wide controls for sponsors performing multiple roles. 

What next?

ASIC outlines in the report 3 key areas of future focus:

Its own principles to drive necessary improvements in practices

• Intensify surveillance and enforcement in private markets, focusing on private credit funds (especially those with real estate lending strategies) and testing compliance in distribution, fees and margins, valuation governance, liquidity, conflicts, and credit risk. It will issue interim stop orders where design and distribution obligations are not met and pursue enforcement for contraventions of the law. ASIC has articulated “private credit done well” principles (grounded in existing law) covering these points, which sit alongside the compliance issues (transparency, distribution, fees, conflicts, governance, valuations, liquidity and credit risk) and are intended to benchmark sector uplift.
• Refresh and clarify guidance. ASIC intends to publish a regulatory catalogue consolidating fund managers’ legal obligations and ASIC guidance; update its conflicts of interest guide (RG 181) to include examples relevant to private markets, and its AFS licensing guide for trustees of unregistered schemes (INFO 251) to reflect recent court clarification of licensing exemptions. 
• Continue with its public markets initiatives (including continuing the two‑year ASX fast‑track IPO pre‑lodgment pilot, progressing the ASX group inquiry (report due 31 March 2026), updating regulatory guides and instruments to be provider‑neutral by end‑2026, and sustaining market cleanliness work (including stress controls) with a report expected in the first half of 2026).
• Increase its data collection. This will involve collaboration with APRA, RBA and ABS to clarify and extend Registered Financial Corporations reporting coverage to non‑bank direct lenders and fund operators (alongside improving use of existing datasets). ASIC will maintain supervision of superannuation trustees on financial reporting and audits, portfolio holdings disclosure (including its stamp duty treatment guide (RG 97)), platforms governance, high‑risk switching, and managed accounts governance. ASIC is proposing a proportionate, targeted approach consistent with a “collect once” principle. A pilot will be designed in FY 2026–27 to gather enhanced data from a small sample of retail and wholesale funds, in collaboration with industry and government agencies. The pilot will calibrate baseline data needs, test feasibility, and inform law reform options for recurrent data collection and inter‑agency information sharing.

Engaging the government on potential reforms to legislative settings for managed investment schemes

ASIC will advocate for law reform to strengthen the wholesale and MIS regime:

• Wholesale fund notification and recurrent data reporting. ASIC will propose requirements for wholesale fund operators to notify ASIC of wholesale schemes and trigger recurrent data reporting obligations at fund level, to improve visibility and supervision. 
• Annual audited financial reports for wholesale funds. ASIC will propose extending retail fund requirements so wholesale funds produce audited fund‑level financial statements, to support valuation confidence and transparency. 
• Tightening wholesale client thresholds. ASIC will propose to raise financial thresholds to "avoid undermining the original policy intent of the tests. However, given the current government rejected lifting these thresholds in its last term, the prospect of change in the short term appears slim.
• Extend Chapter 5C‑like statutory duties to wholesale operators. ASIC will propose extending the codified general law fiduciary obligations (act honestly, with care and diligence, in members’ best interests; treat members equally or fairly) that currently apply under Chapter 5C of the Corporations Act to include wholesale fund operators. 
• Timely significant event disclosures to investors and ASIC. ASIC will propose mandating prompt disclosures and notifications of significant events (including redemption suspensions) to allow earlier regulatory intervention and informed investor decisions. 

The industry’s role in lifting practices

• Engage with industry bodies to adopt enhanced standards for private credit and broader private markets within 12–18 months. 

Our takeaways for private capital sponsors

ASIC’s approach is broadly where we expected it to land: proportionate uplift in conduct, transparency and data, with priority on retail‑facing private credit.

1. Focus is private credit, retail‑facing funds. ASIC’s short-term focus is private credit, with intensified surveillance and enforcement where governance, marketing/distribution, liquidity and credit risk controls fall short in retail‑targeted strategies. ASIC will prioritise surveillance of real estate‑focused private credit funds, scrutinising distribution suitability, fee structures and net interest margin treatments (including borrower‑paid fees retained by managers), valuation methodologies and governance, liquidity mismatches in open‑ended vehicles, and conflicts (including related‑party transactions and multiple exposures to the same borrower).
2. Disclosure of fees and economics. Expect close testing of how returns are constructed and presented, including transparency over net interest margins, borrower‑paid fees and any fee layering; ensure marketing and research references are balanced and accurate and suitability targeting is robust.
3. Valuations and audited fund‑level financials. Uplift valuation governance (methodologies, independence, frequency and documentation) and be prepared for law reform that would require annual audited financial reports at the fund level for wholesale schemes.
4. Conflicts and information controls. Strengthen firm‑wide conflicts frameworks and MNPI controls across advisory, lending and investing functions; ASIC will refresh RG 181 with private markets examples by end‑2025.
5. Liquidity alignment and significant events. Align redemption terms to asset liquidity, standardise stress testing, and prepare timely investor/regulator notifications for gates/suspensions if “significant event” obligations are introduced. 
6. Data collection and recurrent reporting. Map internal data and build digital reporting capability now. Ensuring data architecture and controls can produce recurrent, reliable, and auditable data in relation to disclosures on portfolio composition and risks, fee and margin practices, valuation governance, conflicts identification and management, alignment of liquidity design in open-ended funds to clear redemption terms and stress testing, and documented origination, monitoring, impairment and default processes within a standardised credit risk framework. Again, this is an area where we think continued advocacy needs to be directed to ensure that such collection and reporting is targeted, purposeful and not duplicative (nor more extensive or invasive than is required of market participants in other jurisdictions).
7. Wholesale regime recalibration. Expect consideration of tighter wholesale client thresholds and extension of fiduciary‑style duties (act honestly, with care and diligence, best interests; fair treatment) to wholesale operators.

Summing up

ASIC’s agenda does not seek to “bank‑regulate” private markets. It is, however, moving decisively toward clearer principles, more consistent fund‑level information, and faster supervisory response in higher‑risk segments — beginning with private credit, particularly retail‑facing strategies. Sponsors that get ahead on valuation governance, conflicts, liquidity alignment and data readiness will be best placed to navigate surveillance, contribute credibly to pilot design, and benefit from the trust premium that stronger, comparable disclosure can create with superannuation LPs and retail distribution channels.

Please feel free to reach out if you would like to discuss any aspect of this alert further. Our Private Capital coverage team is monitoring developments very closely.