Securities markets, participants and ASIC
A paper by Tony D'Aloisio, Chairman Australian Securities & Investments Commission to the Securities & Derivatives Industry Association Conference in Melbourne, 22 May 2008.
Let me begin with a quote:
'The combination of intense selling pressure, market mechanism failures, and lack of information exhausted much of the available liquidity, caused substantial uncertainty, drove down prices, and generated unprecedented volatility in all the linked markets.'
You may think this is a description of the recent market volatility. In fact, it is the Chairman of the US Securities and Exchange Commission describing what occurred on 19 October 1987. It serves to remind us (something all of you at this Conference know all too well) that markets are cyclical.
My topic today is Securities Markets, Participants and ASIC: a pretty wide topic I know, but with ASX (a body we supervise) speaking before me and the Minister for Superannuation and Corporate Law (in charge of ASIC) speaking after me, 'flexibility' is not a bad thing to maintain!
In fact, when I was asked to speak, around October last year, a flexible topic seemed the way to go as there was considerable time to go to the Conference and the storm clouds had started to build from August 2007 (with the US subprime fall out then beginning to emerge). Not to mention that at the time, the outcome of the Federal Election was unclear and the then Opposition had not announced its corporate law reform agenda.
Let me take advantage of that flexibility by covering, four topics which are not only current but are clearly relevant to you and to your industry and your business.
- First, to update you on ASIC at the end of the first 12 months since I was appointed Chairman.
- Secondly, to give you my views on the regulatory issues which have arisen out of the recent market volatility or turmoil.
- Thirdly, to outline to you what the forward agenda is for ASIC in the next 12 months, focusing particularly on what will be relevant to you – in the context of the ASX and other market operators, the listed markets and brokers and dealers who operate in those markets.
- Fourthly, to outline to you possible future developments and their relevance to you, your industry and ASIC in the next two to three years.
What I hope you get out of my presentation will be the following:
- first, an understanding of ASIC's priorities;
- secondly, how those priorities will have a direct impact on your business and your industry in the next 12 months, and possibly, in the next two to three years.
My overall message is this: ASIC's approach will continue to be measured as it was in response to the recent market volatility or turmoil. Our emphasis will continue to be to resolve issues within the existing regulatory framework and only seek legislative reform after we have pushed the existing regulatory regime to its limit.
This does not, however, mean ASIC is a passive regulator or that there will not be changes. As I will explain, we will continue the process we started in May last year of increasing resources in a number of areas which will impact on you and your industry – most notably in the greater protection of retail investors, increased effort to stamp out insider trading and market manipulation and to improve disclosure.
We will work with market operators, such as the ASX, and with industry associations such as the SDIA and with the industry to assist us in handling these issues.