ASIC concern over private market pump up, as bankers call for calm

The corporate regulator has called for business to speak up with ‘actionable’ ideas to reduce the burden of new laws, as it flagged a push to scrutinise activity in private markets.

ASIC’s Melissa Smith, Tim Mullaly and Joe Longo in Sydney for a Parliamentary hearing. Picture: Jane Dempster/The Australian

Top regulator Joe Longo has flagged concerns around conflicts of interest and overly bullish valuations in private markets, as investment banking heavyweight Guy Fowler pushed for a lightening regulatory load to encourage investment in Australia’s capital markets.

At a business summit in Sydney on Wednesday, the Australian Securities & Investments Commission boss said he was open to a “mature” discussion with business over how the regulator could make things easier for business.

But Mr Longo called on Australia’s big bankers to show “humility” and avoid “complacency” in their dealings with the market and regulators.

He said he wanted “actionable ideas” noting ASIC wanted to hear about “particular issues or concerns” around regulatory settings “that are causing unnecessary friction in the system”.

But Mr Longo said he was concerned about conduct in private capital markets, noting “it’s less transparent”.

His comments come as ASIC flagged plans to scrutinise trading in private markets and financial products amid an inquiry into the cleanliness of Australia’s public markets.

Mr Longo said ASIC was concerned about protecting investors.

“The issue we’ve got is conflict of interest and valuations,” he said.

“The stakes are very high.”

Mr Longo also took aim at Australia’s bankers, after Commonwealth Bank ignored attempts by ASIC to not remove a cap on variable bonuses for its home lending staff.

As revealed in The Australian, ASIC repeatedly tried to get CBA to defer its move.

Mr Longo said bankers had to show “humility” and avoid “complacency”.

“That’s always an issue in any sector,” he said.

“We have to maintain a culture of accountability.”

It comes as ASIC runs the ruler over ANZ’s trading team, amid allegations the bank’s trading team manipulated the market last year ahead of a $14bn Australian government bond placement.

Documents show ASIC demanded detailed documentation around the placement from the Australian Office of Financial Management in January, scoping out past risk manager reports and “highly sensitive market information”.

Mr Longo told media ASIC’s probe into ANZ was “very complex” and required the regulator to interview a large number of staff at the bank, warning any probe would not be concluded before the end of this year or early next year.

“We have high expectations of the banks in that respect,” he said.

But Mr Longo said if regulations were “having a chilling effect” then they were “not in the public interest either”.

“This is a discussion we need to have as a community and market participants because we’re a relatively small economy on the global stage,” he said.

This comes as major Australian companies look to list on global exchanges, with Sydney tech group Canva approaching a US-market listing.

Canva co-founders Cliff Obrecht, Cameron Adams and Melanie Perkins. Picture: Supplied

Mr Longo said the decline in IPOs on Australian markets was “becoming a more obvious problem and challenge”.

But Mr Fowler, co-executive chair of Sydney investment bank Barrenjoey, said it was important to protect private investment markets in any attempt to improve governance of unlisted companies.

“We need to make sure we’re not overly hamstrung,” he said.

The former UBS banker said ASIC could look to offer companies a “honeymoon period” as they became public “before you need to comply with all those obligations”.

“It’s a conversation about the art of the possible,” he said.

Mr Longo said ASIC was engaged with the Australian Securities Exchange and market participants, noting “we’re very interested in getting feedback on what ASIC can do and the regulatory settings that can be adjusted to encourage all the activity we’re interested in”.

ASX chief executive Helen Lofthouse said she “would love to see Canva come and list on the ASX”, noting Australia’s markets were attractive to global companies looking to access capital.

Ms Lofthouse said the window for companies looking to list was open, noting markets had shown strong support for recent listings, including Mexican restaurant chain Guzman y Gomez.

“Let’s make sure there aren’t unnecessary barriers to being a listed public company,” she said.

Ms Lofthouse pointed to the move to propose applying new climate reporting rules to private companies as a good example of evening the playing field.