ASIC has today released its assessment report on the listing standards of the Sydney Stock Exchange Limited (SSX).
The report concludes that SSX should make a number of changes to improve compliance with its statutory obligations.
These changes include putting adequate arrangements in place to manage conflicts between its commercial interests and the need for it to operate a listing market that is fair, orderly and transparent. SSX's ownership and business model makes conflict management essential because it is a wholly owned subsidiary within a corporate group, where other businesses in the corporate group provide professional advisory services to entities seeking admission to its official list.
SSX also needs to improve how it monitors and enforces compliance with its listing rules, including whether an entity is appropriate for admission to its market.
Additional licence conditions have been imposed on SSX's Australian market licence to ensure that SSX has the appropriate arrangements in place to meet its statutory obligations, particularly those about managing its conflicts and having suitable arrangements to monitor and enforce its listing standards.
SSX was consulted on the imposition of the licence conditions, which are designed to bolster the independence of its board, admissions and market supervision committees so it can better manage the conflicts that arise from its exchange ownership structure. SSX has also introduced operational controls to support its compliance with its statutory obligations in the future.
ASIC Commissioner Cathie Armour said, ‘Listing standards are critical to the integrity of the Australian equities market, and the trust and confidence investors have in it. As one of only a small number of domestic listing markets, Sydney Stock Exchange Limited has an important role to play in upholding standards expected of listing markets in Australia.
'ASIC will continue to closely monitor SSX’s arrangements and its implementation of the conflict management and market supervision controls the subject of the additional licence conditions, and related operational changes,' Ms Armour said.
Background
This report has drawn on materials, analysis and research from the period 1 July 2013 to 2 June 2016, and subsequent detailed discussions with SSX on a range of related matters.
Under the Corporations Act, ASIC may assess how well a licensed market operator is complying with any or all of its obligations. This was previously tested by way of an annual assessment against a wide set of prescribed obligations. However, due to a change in regulations, ASIC can now more effectively target specific areas relevant to the operation of the market.
This is the second assessment arising from ASIC's targeted assessment of listing standards across Australian listing markets. We will conclude with a third and final report on the NSX market assessment of its listing standards later in the year.
In this report, we assessed the extent to which SSX has met its obligations to:
- operate a listing market that is fair, orderly and transparent; and
- have adequate arrangements to monitor and enforce compliance with its listing rules.