ASIC’s priorities for the supervision of market intermediaries in 2024–25

ASIC’s strategic priorities are detailed in ASIC’s Corporate Plan 2024–25.

In our supervision of market intermediaries, ASIC will focus on five strategic priorities:

1. Improve consumer outcomes
2. Address financial system climate change risk
3. Better retirement outcomes and member services
4. Advance digital and data resilience safety, and
5. Drive consistency and transparency across markets.

Our Corporate Plan and strategic priorities are shaped by the opportunities and challenges of our external environment, including rapid technological transformation, cost of living pressures, climate change, an ageing population and evolving financial market dynamics.

This year ASIC will undertake a wide range of key projects and regulatory activities outlined below to deliver on our strategic priorities.

In 2024–25, a new strategic priority—focused on driving consistency and transparency across markets and products—underscores ASIC’s commitment to strengthening integrity across Australia’s markets.

The dynamic between public and private financial markets continues to evolve. Global trends include reductions in the numbers of initial public offers and listed companies, the scale and growth of superannuation and pension funds, digital transformation, disintermediation, and the rapid growth of private equity, private credit and other alternative investments.

To drive consistency and transparency across markets and products, we will:

• examine changes in public and private markets for equity and debt capital, including the significant growth of private markets and the implications for the integrity and efficiency of markets
• engage with industry, monitor international developments and facilitate discussion about regulation of capital raisings and equity and debt capital market efficiency, transparency and resilience
• enhance monitoring and reporting on our markets’ cleanliness, expanding beyond equity markets
• engage with market stakeholders on our pre-hedging guidance, conduct thematic reviews to assess trader practices to raise and harmonise minimum standards of conduct, and promote fair competition and the effective functioning of markets
• conduct thematic reviews of corporate advisers and private finance funds, including governance, valuation practices, management of conflicts of interest, staff and insider trading, protection of confidential information and fair treatment of investors
• actively target leaks of confidential information and review the confidentiality protections of parties involved in public and private market transactions. Leaks undermine market integrity and may negatively impact the attractiveness of Australian markets as a place to raise capital and transact
• establish a specialist insider trading team to expedite insider trading investigations and increase the number of criminal briefs we refer to the Commonwealth Director of Public Prosecutions
• supervise and support integrity and fairness in energy commodity and carbon credit markets (further described in our work to address financial system climate change risk)
• provide guidance on, and implement, the ASIC Derivative Transaction Rules (Reporting) 2024 in October 2024
• make clearing and settlement services rules to support ASX in fostering competition for clearing and settlement and aim to facilitate outcomes that are consistent with those that are expected in a competitive market for clearing and settlement services, and
• enhance our guidance and processes for supervising the conduct of financial market infrastructure providers.

Our work to drive consistency and transparency across markets and products will in many ways also contribute to achieving our strategic priority to support better retirement outcomes and members services.

We will work to drive better outcomes for consumers of financial products and services, with a focus on:

• the design and distribution of financial products
• predatory sales practices
• disruption of online investment scams
• alerting investors to unlicensed conduct through Moneysmart, and
• dispute resolution.

With a market’s focus, we will:

• review consumer outcomes from emerging methods of complex product distribution to retail clients,
• disrupt and take action against misleading or deceptive conduct and misinformation relating to investment products. This will include advertising or digital engagement practices that obscure the risk, performance or nature of financial products, and
• consider vulnerabilities that may lead to share sale fraud, amplify understanding of the potential for harm of control failure in this area and encourage better practices by market intermediaries.

Market intermediaries and financial sector organisations are increasingly grappling with climate-related risks. With the growth of sustainability-related investment, there is increased risk of poor disclosure and greenwashing, including using net zero statements and other sustainability-related claims. These can have a negative impact on efficient capital markets.

As we move towards a net zero emissions target, ASIC will support market integrity and protect consumers and investors, with a focus on:

• climate-related disclosure
• greenwashing (see REP 763), and
• integrity and fairness in energy and carbon credit markets.

Over the next 12 months, to support sustainability and Australia’s energy transition, we will:

• continue to support the introduction of the mandatory climate-related financial disclosure requirements for large Australian businesses and financial institutions through updated guidance and consultation
• support fair and efficient carbon markets and products through effective oversight, licensing and supervision
• update policy and guidance on regulating carbon-based financial products to provide clarity on disclosure
• contribute to the formation of global carbon market standards and consistency through our work with IOSCO and other international regulators
• monitor new and established markets for carbon-related financial products (such as Australian Carbon Credit Units) to ensure markets and intermediaries are meeting expectations and standards
• undertake surveillance activity and take enforcement action, where necessary, to prevent harms from greenwashing and other sustainable finance-related misconduct, and
• conduct surveillance of market intermediaries’ commodity and energy derivatives trading and supervisory functions.

New and evolving technologies continue to transform our financial system. Significant advances in artificial intelligence are increasingly driving predictions, decision making and recommendations across many organisations. As digital services become more interconnected, cyber attacks and other outages continue to have the potential to cause widespread disruption and damage.

We will:

• hold ASX to account on the safe and efficient implementation of the CHESS replacement program, ensuring all regulatory requirements continue to be met. We will also oversee planned refreshes of the ASX Trade and ASX 24 trading systems, and upgrades to ASX’s derivatives clearing platforms (the Clearstar program)
• monitor how market intermediaries use AI and assess relevant risk management and governance arrangements
• consult on proposals to modernise and harmonise market integrity rules relating to trading infrastructure, automated order processing and manipulative trading, and to address emerging risks associated with AI and algorithmic trading
• encourage market intermediaries to participate in a self-deployed cyber resilience exercise. We will share learnings to improve cyber resilience capabilities, and
• coordinate ASIC’s work to monitor and engage with market intermediaries on digital assets, tokenisation and decentralised finance. We will update guidance on the regulatory perimeter and encourage preparation for the proposed regulation of digital asset platforms.

In addition to these projects aligned to our strategic priorities, ASIC will continue a wide range of core regulatory activities to monitor and promote market integrity and consumer protection.

ASIC is one of Australia’s most active law enforcement agencies. We will continue to deploy our significant expertise and resources to detect, disrupt, investigate and respond to unlawful conduct in Australian markets.

ASIC remains committed to the promotion of market cleanliness, market integrity and the protection of consumers and investors—irrespective of the changing shape of markets. These objectives are fundamental to maintaining trust in Australia’s financial system.

We encourage you to use these strategic priorities, projects and regulatory activities as a reference for your compliance, supervisory and risk management programs that support your business activities, and to prepare for your interactions with ASIC.