ASIC has announced its preliminary views on the opportunities and risks emerging from shifts in public and private capital markets and called for feedback and debate on key questions as part of a discussion paper launched today.

The paper, Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets (DISCUSSION PAPER), opens a discussion on ASIC’s regulatory approach and seeks actionable ideas for it to consider to enhance the operation of Australia’s capital markets.

The paper explores the changing dynamics in capital markets, in Australia and abroad, including declining listings on public markets, the rapid growth in investment capital allocated to private markets and the influence of superannuation funds on markets.

ASIC Chair Joe Longo said the discussion paper was one of the most significant initiatives of the year for the regulator.

‘ASIC is determined to achieve dual goals with this paper by ensuring Australia’s markets are attractive to companies and investors while protecting against risks,’ Mr Longo said.

‘Public and private markets support one another, and both are critical to our economy, so it’s important we approach this from both an opportunity and risk perspective. The critical point for ASIC is whether there is a need for interventions to address risk or adjustment to how regulation operates to take advantage of opportunities important for the attractiveness of our capital markets.

‘We can’t be complacent about the future of Australia’s public equity markets. While history tells us that the current downturn in Australian IPOs and public companies is likely cyclical, deterioration in the quality, diversity and depth of public companies would have significant adverse effects on the economy and on investors’ participation in it. While we don’t see regulatory settings as the dominant factor here, there may be opportunities to adjust in order to improve the attractiveness of our markets.

‘We are also concerned about the private credit market. While it does not appear to be systemically important in Australia, failures are on the horizon, and at current volumes it is untested by prior crises.

‘We are keen to understand how the growing dominance of superannuation in Australia’s economy is influencing our markets, given its crucial role in securing our financial wellbeing on retirement.

'We note our international peer regulators have access to more reliable and recurrent data on private markets to enhance their transparency. This makes it easier to identify risks as well as opportunities. At present, ASIC’s data and information gathering powers are inefficient and incomplete. We simply can’t do our job properly if we are in the dark,’ Mr Longo said.

Internationally, regulators are reviewing their regulatory settings in response to these changes in capital markets, with some focusing on strengthening their public markets and others moving to address vulnerabilities identified with transparency and investor protection in private markets. Key risks of concern include opacity, valuation uncertainty, conflicts of interest, illiquidity and leverage in private markets, which includes private equity and private credit markets.

Feedback on the discussion paper questions is due by 5pm on 28 April 2025. Details on responding can be found in the discussion paper.

Downloads

• Discussion paper Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets

Background

As Australia’s financial markets regulator, ASIC has been engaging with a wide spectrum of perspectives through panels, forums and structured engagements on the evolving public and private market dynamics.

In conjunction with this paper, ASIC commissioned a research report by Dr Carole Comerton-Forde, Evaluating the state of the Australian public equity market: Evidence from data and academic literature (REP 807), which has informed ASIC’s approach in this paper.

As private markets grow, ASIC is increasing its supervision of private equity funds, private credit funds and their advisers. In 2025, ASIC’s thematic surveillance of private equity and private credit funds is focusing on fund governance, valuation practices, management of conflicts of interest and fair treatment of investors. Additionally, for retail private credit funds, ASIC will test compliance with disclosure and distribution obligations.

The discussion paper follows ASIC’s report, Equity market cleanliness snapshot report (REP 786), released in July 2024. The market cleanliness report showed Australia’s equity markets have continued to operate with a high level of integrity and remain consistently among the cleanest in the world. The report provided a broader context for the findings in Report 787 Review of Australian equity market cleanliness: 1 November 2018 to 30 April 2024 (REP 787).

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