ASIC today announced it will continue working closely with the market over the next six to nine months to improve industry standards on the responsible handling of rumours and corporations’ management of confidential information but will not issue regulatory guidance on either subject at this stage.

These proposed standards are among the many initiatives, primarily enforcement action on insider trading and market manipulation, that ASIC is pursuing to maintain confidence in the integrity of Australia's markets.

ASIC’s decision follows industry and public consultation on these two issues.

‘ASIC is focused on these and other initiatives to improve market integrity, such as enforcement action on insider trading and market manipulation. During the process of consultation, concerns were expressed and these related to issues of regulatory certainty, costs versus benefits and possible consequences of denying the market important information,’ said Ms Belinda Gibson, ASIC Deputy Chairman.

‘As a result, we have decided to continue our consultation with industry over the next six to nine months and then make a decision on whether and what additional regulatory guidance is needed.

‘I would like to thank the people who have been involved in the consultation to date. They have made an important contribution on both these important initiatives, and I look forward to their continued input. Over the next six to nine months our focus will be to work with industry to deal with their concerns and explore ways of achieving a lift in standards in the management of information’, Ms Gibson said.

In September 2009, ASIC set out principles to assist market participants when handling rumours in Consultation Paper 118 Responsible handling of rumours (CP 118).

The principles were developed noting concerns that confidence in the integrity of Australia’s markets could be undermined if investors believe rumours are actively spread in the market to distort proper price discovery. These concerns were also noted by CAMAC in its report Aspects of Market Integrity (June 2009). The concerns were highlighted during the market volatility at the time of the Global Financial Crisis.

In response to CP 118, ASIC received 12 submissions. Many of them noted the practical difficulties involved in drafting specific regulatory rules that define rumours and distinguish those from genuine expressions of opinion to inform price discovery. Cost and benefit implications were also raised.

ASIC acknowledges these concerns merit further discussion. ASIC remains of the view that, at a minimum and in line with practices in the major overseas capital markets, AFS licensees who are actively involved in the market should consider:

• having in place written procedures which provide clear guidance for operational areas involved in the market about how to deal with rumours;
• training employees in the relevant areas about these procedures, and
• monitoring compliance with these procedures and being able to demonstrate compliance with the procedures.

As a next step, ASIC will monitor the market and work further with industry over the next six to nine months to understand their concerns and how these principles on rumours might be adopted in practice before making a decision about whether and what further regulatory action may be needed.

In December 2009, to help improve market practices on listed entities' handling of confidential information, ASIC released

Consultation Paper 128 Handling confidential information (CP 128). The Consultation Paper proposed best-practice guidelines to assist entities manage their information, and thus promote confidence in Australia’s capital markets.

In response to CP 128, ASIC received 25 submissions. While the submissions welcomed guidance in the area, many had specific comments or suggestions on particular situations. ASIC’s goal is for the guidelines to be widely adopted and applied as broadly as possible, so ASIC intends to work with industry bodies so they might finalise this important guidance on behalf of their members. ASIC will do this over the next six to nine months.

Background

In March 2008, ASIC commenced Project Mint a major market integrity investigation that focused on false rumours and their effect on market prices. This investigation was intended to be a disruptive enforcement technique, that is, it sent a reassuring signal to the market that ASIC was actively engaged and this helped shape market behaviour.

The objective of Project Mint is now well understood - that making false statements and spreading false rumours is illegal and that ASIC will act to address possible breaches in this area to promote market integrity.

Since January 2009, ASIC has achieved 11 significant convictions:

• Three insider trading convictions;
• Five market manipulations convictions; and
• Three false and misleading conduct convictions.

Insider trading matters

[This media release was amended on 19 March 2019 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

[This media release was amended on 21 May 2019 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

[This media release was amended on 23 September 2019 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

Market manipulation matters

[This media release was amended on 19 March 2019 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

[This media release was amended on 6 March 2020 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

[This media release was amended on 2 January 2020 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

[This media release was amended on 6 March 2020 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

False and misleading conduct matters

[This media release was amended on 20 April 2020 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

[This media release was amended on 2 January 2020 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]