The Australian Securities and Investments Commission (ASIC) isn’t letting up on its mission to safeguard public markets, announcing late last week that the shifting balance between public and private markets will be a top focus for 2025.
Besides its intention to lead discussion on issues key to the “ongoing and future success of Australia’s capital markets”, ASIC said it, like its domestic and international counterparts, is interested in pinpointing potential vulnerabilities and harms that may emerge with the growth of private markets.
“Both public and private markets are important to our economy and play a role in generating wealth. Through superannuation investments, many Australians have indirect exposure to private assets. Private markets operate differently than public markets and are inherently less transparent,” the corporate regulator said.
Last year, ASIC announced it would review private markets due to concerns regarding its opacity and the rapid growth of the asset class.
“As we see more and more activity in the private market, the question I have for myself and for ASIC is: what is happening here?” ASIC chair Joe Longo said at the time.
“It’s less transparent – should we be worried about conflicts of interest and valuations?”
The review, which is expected to take at least two years, will target a sample of firms operating in the space, according to the regulator’s most recent update.
“We are also increasing our focus on private markets through our surveillance work: as part of this work ASIC will review the governance processes and practices of a sample of responsible entities of retail private credit funds, including their asset valuation and liquidity management practices,” ASIC said last week.
While Longo has in the past assured that the regulator does not hold a preference between public or private markets, market participants have their concerns.
Namely, PrimaryMarkets’ executive chairman, Jamie Green, said late last year that increased scrutiny of the sector may lead to “more conservative investment behaviour and a change in investor sentiment”.
“When ASIC steps in to review private market transactions, it can disrupt the trust and discretion that usually characterises these markets,” Green said.
“Investors may become more cautious about engaging in private market deals, particularly in sectors or industries where regulatory intervention is more likely.”
While enhanced oversight is expected to protect investors and promote transparency, Green warned that the short-term impact of ASIC’s review could result in “increased uncertainty, reduced market confidence and potential disruptions to deal-making activity”.
Longo has previously argued that the shift towards private markets has reduced a number of “large, strong-performing listed entities”, significantly limiting opportunities for many Australians and smaller investors to directly participate in their future success.
With billions erased from Australia’s listed markets in recent years, the chair raised concerns about the shrinking diversification opportunities in public markets and the growing concentration of larger institutional investors.
CHESS on ASIC’s radar
Also on ASIC’s list of priorities for 2025 is the impact of ASX’s CHESS replacement on Australian markets.
“The sound and seamless implementation of the replacement of the Clearing House Electronic Subregister System (CHESS) is fundamental to maintaining investor confidence and the orderly and efficient operation of Australia’s financial markets," the regulator said.
“ASIC, in partnership with the RBA, will continue to focus on ASX maintaining resilience, reliability and integrity of its clearing and settlement operations as the replacement project progresses, and that it appropriately manages associated risks.”
