Regulators work to ensure market stay open in any virus crisis

Financial institutions are preparing to move sites or work from home to keep markets open in any coronavirus explosion.

ASIC chair James Shipton. Picture: AAP

Corporate watchdog chairman James Shipton said “one never knows” the impact of pandemic events on financial markets, but warned the regulator stood “prepared for any eventuality” and was teaming up with global watchdogs to guard against the crisis.

Appearing before the parliamentary oversight committee on Friday, the Australian Securities and Investments Commission said it was working with large institutions and the Australian Financial Markets Association to ensure financial markets remain open during the coronavirus outbreak, which is threatening to explode into a pandemic.

ASIC executive director of markets group Greg Yanco said the regulator was making sure the market could operate, although he said the economic impact of the COVID-19 virus was uncertain.

“Precedence suggests it could be short-lived,” Mr Yanco said.

Mr Yanco said a number of AFMA institutions had tested financial market infrastructure if their organisation needed to move to another site or have staff working from home.

“We haven’t had any points of failure. We’re confident that if there is an escalation in our region the market participants will be ready for it,” Mr Yanco said.

Mr Shipton said ASIC was “closely co-ordinating with market participants and with brokers” in the Australian market.

He also said commissioner Cathie Armour has met with the International of Securities Commissions this week to talk about “potential market impacts” of the coronavirus.

Mr Shipton said ASIC had set up an internal working group to monitor the threat and work with other regulators.

On Friday The Australian revealed the prudential regulator forced Australia’s biggest financial institutions to prove they have “adequate plans in place” to continue to operate in the face of the growing threat of a coronavirus pandemic, writing to hundreds of the nation’s biggest banks, super funds, insurers and health funds asking them to provide copies of their contingency plans for dealing with the fallout from the emerging pandemic.

“We very much stand prepared for any eventuality,” Mr Shipton said. “This agency is prepared.”

Mr Shipton, who worked as a regulator and financial markets executive in Hong Kong, said he had lived through the SARS crisis, the avian flu crisis and the swine flu crisis.

“We have a pandemic response plan in place in relation to the coronavirus,” Mr Shipton said.

“In accordance with our practice in these types of scenarios, ASIC has contacted significant market participants to ascertain what business continuity arrangements they have in place.

“ASIC is also monitoring the continuous disclosure of listed entities as a result of changing market sensitivities and volatility,” he said.

“Importantly, we are closely working with fellow regulators, both domestically and overseas to monitor the situation.”