ASIC says a decision on action from its ANZ bond market probe due in the first half

ASIC expects to bring its examination of ANZ’s bond market conduct to a head in the first half of the year, and it’s one of the most complex cases the regulator has dealt with.

ASIC chair Joe Longo says the ANZ markets investigation is highly complex. Picture: Josie Hayden

The corporate regulator expects to bring its probe into ANZ’s conduct in the bond market to a head by mid-year, as it shapes up to be one of its most complex cases.

Australian Securities and Investments Commission chair Joe Longo says that while the ANZ markets investigation is in its “later stages”, it was proving to be complicated.

“I’m hoping that we’ll have a public result in the first half of this year in that matter,” he said in an interview.

“We’re talking to experts, we’re looking at the evidence … ANZ are taking the matter very seriously as well and so it’s all going to take some time, but I’m hoping to bring this thing to a conclusion one way or the other in the first half.”

ASIC is assessing claims of irregular trading and pricing activity related to a $14bn federal government bond issuance from 2023. ANZ was a risk manager on the transaction and there are allegations activity in the futures market may have led to the government being exposed to higher borrowing costs.

Mr Longo had previously said ASIC expected to finalise its internal view of the ANZ markets matter in 2025’s first quarter, while also deciding whether to pursue any enforcement action against the bank.

“We’re investigating that pre-hedging activity … We have serious concerns about it, which is why we’re conducting an investigation. It’s a complex investigation,” he said in this week’s interview.

“There’s a lot of data to go through and some of the underlying issues require expert input, and that takes time to get and it takes time to find experts.”

Mr Longo highlighted that the ANZ matter was at least as complex as a markets case he led in the 90s against Nomura. “It’s probably one of the most complex markets matters we’ve dealt with, maybe not ever, but close,” he said.

In 1998, a landmark case resulted in the Federal Court finding that a London-based Nomura team engaged in false and misleading trading linked to the ASX and Sydney Futures Exchange. The activity related to stock manipulation and buying shares from itself.

ANZ chief executive Shayne Elliott last year said the bank’s internal assessment of the bond trading matter found no material wrongdoing. The review did, however, identify staff conduct issues within its markets division and errors in how it was reporting data to the Australian Office of Financial Management. The conduct issues led to the termination of one staff member and ANZ parting ways with two others.

Mr Longo said the ANZ matter was receiving funding from ASIC’s Enforcement Special Account and that would continue if the matter proceeded.

“Most, if not all, of our court cases get some form of ESA funding, just by definition because of the costs involved and the materiality … And the ANZ matter certainly is getting ESA,” he added.

The Australian this week revealed ANZ may face regulatory action against its retail bank as ASIC probes allegations interest was incorrectly accrued on thousands of accounts. The regulator is also closely assessing ANZ’s customer hardship provisions and whether to take the bank to task for charging fees to dead customers’ accounts.

Mr Longo declined to comment on any potential action against ANZ’s retail bank.

“We’re making our presence felt with all the banks, including ANZ,” he said.

Separately, ASIC is expected to this year to further engage with a group of investment banks which are pressing the ASX and the corporate regulator for wholesale changes to the sharemarket listing process, in order to jump-start a moribund market for initial public offerings.

The Australian last year revealed JPMorgan had corralled eight investment banks – including Barrenjoey and Goldman Sachs – to make a formal and confidential submission urging sweeping changes to streamline the domestic IPO process.

Mr Longo said ASIC had engaged with the group “very constructively and intensely”.

“That was one idea and that idea would require a significant departure from current practice and we would say current law,” he said. “We’ve gone back to them and asked them to reconsider their proposal in light of our concerns or issues.”

Mr Longo expressed confidence that Australia had “a robust public market”, despite concerns around a marked decline in the number of new listings.

“We’re not alone in that (decline in new IPOs). That’s a global phenomenon,” he said.

“We’ve done a lot of work, a lot of roundtables … The idea that regulation, or the regulatory settings, are a key reason why there aren’t more listings, I think, is incorrect. “That’s not what we’re hearing.

“I’m not saying there isn’t room for improvement.”

While total Australian IPO transactions climbed fourfold to US$2bn in 2024 from the previous year’s anaemic levels, activity overall for new listings was well down on a 10-year annual average of almost $US3.7bn, according to London Stock Exchange Group (formerly Refinitiv) data.

Transactions last year included the floats of Mexican food chain Guzman y Gomez and HMC Capital’s data centre owner, DigiCo Infrastructure REIT.

Originally published as ASIC says a decision on action from its ANZ bond market probe due in the first half