ASIC's focus post 11 March 2004
A presentation by ASIC Commissioner, Berna Collier, to the Investment and Financial Services Association, Sydney, 17 March 2004.
Welcome to the world post-FSRA transition. Today I'll address our position on a number of regulatory matters, including what life looks like post March 11 and also cover some of the issues that have emerged in Financial Services over the past year.
For the past couple of years we have had a major focus on implementing FSRA , as have you. Can I take this opportunity to acknowledge the meaningful dialogue we have had with IFSA over that period. I believe FSRA has been a good example of how the regulator and industry can consult and hopefully improve the position of all parties while maintaining the Government's intent in the legislation. However, all of us have also had to attend to 'business as usual' matters. For us that has meant regulating under the old law and dealing with issues as they emerged.
One of the key issues we have had to look at over the past few months concerns the managed fund abuses which were evident in the US toward the end of last year.
As you would expect, ASIC wanted to ascertain whether issues such as late trading, market timing and indeed the provision of fund information on a preferential basis were present in the Australian market. Accordingly we wrote to some 70 fund managers representing more than 90% of the market (by value) to enquire about these practices.
Our selection of responsible entities to approach was based on, among other things, knowledge of funds through intel/surveillance and IFSA information. We selected the biggest funds according to retail exposure and also a selection of smaller funds through internal intel. The selection was not risk-based as it is a review as distinct from an investigation (as I think was pointed out by IFSA in its subsequent circular to its members). We did not look for SEC fund connections – we simply wanted to get the largest coverage of funds we could, to give us a bigger picture.
To be more specific, we are inquiring about issues such as :
- whether funds are priced so that investors pay fair value when they enter and exit
- whether information is disclosed broadly in an appropriate way
- questions about whether there have been any approaches to deal preferentially in, e.g. a late trading context, to accept trading after the late closing period.