ASIC's Private Markets Review: The next chapter

In February this year the Australian Securities & Investments Commission (ASIC) released its discussion paper on the evolving dynamics between public and private markets.  The discussion paper canvassed key and emerging issues relating to public and private markets, an overview of international market developments and regulatory initiatives, and ASIC’s preliminary views on some of these matters.

Interested parties were invited to provide their views to ASIC on a variety of questions related to the operation of Australia’s public and private markets by the end of April.  KWM, along with over 90 other parties, took up the invitation and provided feedback, insights and actionable ideas to ASIC.  Respondent parties included a broad spectrum of participants in our markets, including superannuation funds, industry bodies, market operators, fund managers, ratings agencies, professional advisers and other specialised groups.

ASIC has now released over 50 of the responses of those parties who were prepared for their views to be made public.  KWM’s response was one of those published.

ASIC’S Key Messages

In a media statement accompanying the release of the responses, ASIC has made a number of interesting points based on its read of the responses, and perhaps giving some cues as to where it may be headed (initially):

• ASIC acknowledged that Australia’s capital markets are strong but changing, and that public and private markets must complement, not cannibalise each other.
• ASIC distilled various themes from the responses, including learning from international experience. The themes include:
  • 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, and that there is an acknowledgement of the need for any regulatory guidance to be measured, developed in conjunction with industry and aligned 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.
  • There could be more to do on data collection and transparency of private markets, including in dimensioning the market itself and learning from international practices.

Many of these themes were emphasised in our response.

• ASIC noted the range of insights and actionable ideas, including streamlining IPOs and disclosure requirements. It also acknowledged the calls for urgency to improve the attractiveness of Australia’s public markets, as well as the caution expressed in many responses to move carefully in adjusting any settings in private markets (again, a point strongly emphasised in our response).

So where did others land on the questions raised for Australia’s markets?

Not unexpectedly, the responses that have been released exhibit a fair degree of convergence around the macro issues, albeit there were different points of emphasis depending on the nature of (and what is at stake for) the respondent party.  Below we have tried to group and summarise the responses into their key “zones”.

Taking a step back (and acknowledging that it still remains early days), there are several encouraging cues for private market participants from the submissions and the ASIC guidance/positioning that has followed:

• ASIC has acknowledged the importance of both our public and private markets working effectively for all who participate in them. In Joe Longo’s own words “ASIC wants both public and private markets to thrive and flourish – together, they drive more investment, more opportunities for companies to grow, and more jobs for Australians”.
• If ASIC’s proposed announcement sequencing and the very recent ASIC action on streamlining IPO processes is any guide, it appears ASIC may be prioritising its immediate action and attention on the public market side. As an aside, ASIC’s most recent action on streamlining the IPO process arose out of a separate submission (outside ASIC’s markets review exercise) that KWM authored with JP Morgan and several other investment banks.
• ASIC acknowledged the need for any private market regulatory guidance to be measured, developed in conjunction with industry and aligned to international standards. At the same time, an implicit acceptance that more time may be required by ASIC to better understand the way Australia’s private markets are operating and where particular risks may need to be better managed.

Next steps

ASIC intends next to publicly announce the “adoption” of some of the proposed actionable ideas and share its “roadmaps” for public and private markets in Q3 and Q4, respectively, this year.  Its further work is apparently going to be supported by further feedback from stakeholders and experts, as well as its own surveillance of retail and wholesale providers of private credit and private market managed investment schemes. 

ASIC has also commissioned expert insight papers on the following (again, perhaps giving some cues as to where it may be headed initially):

• the future state of Australia’s capital markets;
• the private credit environment; and 
• international approaches to data and transparency in private markets.

For KWM the advocacy work continues for both our public and private market teams. This will include further engagement with ASIC as it approaches its next public announcements, including holding KWM’s Digital Future Summit in August where Joe Longo will be speaking on ASIC’s public and private markets work.

We will update you again as the roadmap becomes clearer and when ASIC makes its next public announcement. In the meantime, we take some comfort from the extent and overall consistency of responses on the private market side and ASIC’s stated appreciation of its mandate to drive financial system performance and improve investor confidence.

Related articles:

• Deciphering ASIC's Private Markets Review: Where Are We Heading in 2025?