ASIC's evolving capital markets report: what it means for industry

Declining public listings, private market growth and plans for enhanced oversight 15 min read

ASIC has released Report 823 'Advancing Australia's evolving capital markets: Discussion paper response report' (the Report), which follows market consultation conducted by ASIC in response to its February discussion paper on public and private markets.

The Report:

• explores the shifting dynamics between public and private markets in Australia, highlighting declining public listings, rapid growth in investment capital allocated to private markets and the growing significance of superannuation funds;
• sets out the key issues ASIC has identified within the current markets and the participants in these markets; and
• details ASIC's plans for the next 12-18 months to address these issues.

The Report details ASIC's intention to increase surveillance, refresh its guidance and pursue regulatory reform. This includes proposals to impose significant additional regulation on the wholesale funds management industry, with many of these proposals requiring legislative amendments to be implemented. The recommendations could set the scene for a reform agenda to play out over the next decade which could impact the establishment, operation and competitiveness of wholesale private funds in Australia.

While the Report emphasises making public markets more accessible, competitive and globally relevant via a two-pronged approach (targeting both the attractiveness of an ASX listing and staying listed), similarly, many of the roadmap's proposed 'stops' are beyond ASIC's remit and will rely on collaboration with other stakeholders to enact meaningful change.

Here, we set out what you need to know about the Report.

Key takeaways 

• ASIC has distilled its findings and recommendations into four areas, being: 'private markets' (with an emphasis on private credit), 'data reporting and transparency', 'superannuation' and 'public markets'.
• ASIC has provided a 'regulatory roadmap' for the next 12-18 months that sets out its key priorities and areas of focus (including to call out specific ASIC guidance to be updated in the coming months). Recommendations that require legislative amendments could take significantly longer and will need to operate in parallel and harmony with any further work on Treasury's MIS review.
• Private market participants should: (a) be prepared for ASIC's focus on enhanced data collection; (b) review compliance frameworks to ensure they are fit for purpose, particularly as they relate to conflicts of interest, valuation and disclosure; and (c) monitor and be aware of ASIC's proposal to apply certain additional regulation (including regulation currently applying only to registered schemes) to wholesale funds.
• Public market participants (and prospective participants) should continue to watch this space. In the short term, boards and issuers can expect a continuation of the streamlined IPO process and a consultative approach on embracing innovation and facilitating dual foreign listings. We are hopeful that ASIC's agenda spurs genuine engagement with the Government and market operators to improve the regulatory and compliance demands on public market participants both big and small without compromising integrity, shareholder safeguards and transparency.

Private markets: wholesale funds management 

ASIC's findings

ASIC acknowledges the important role of private markets and specifically identifies private credit as having an important role to play in the Australian economy when it is 'done well'. ASIC nonetheless reiterates its concerns with the sector acknowledging that while practices vary from better to worse, there remain a number of compliance issues, including transparency gaps, inappropriate marketing of products, poor fee disclosure, ineffective conflict of interest management, weak governance, valuation issues, liquidity risks and inadequate credit risk management. ASIC also notes that many of these issues apply to private markets more broadly—reforms in the area of private credit could therefore spill into other asset classes.

In light of private credit's increased targeting of retail and less sophisticated wholesale investors (particularly in relation to private credit funds invested in real estate), and the compliance issues identified above, ASIC has developed a set of 10 principles that it hopes will assist private credit participants in complying with the law and tackling such compliance issues:

1. act as stewards of investor capital
2. maintain adequate resources and expertise
3. provide transparent information to investors
4. ensure product design and distribution is transparent and targeted appropriately
5. ensure fair and transparent fees
6. manage conflicts of interest effectively
7. implement robust governance structures
8. conduct fair and timely valuations
9. manage liquidity risk appropriately
10. apply disciplined credit risk management.

What ASIC plans to do next

Many of ASIC's proposals sit outside its current remit and would require legislative change. Significant industry consultation would be required on these proposed reforms given the breadth of fund vehicles and transaction structures that could be affected. The risks of unintended consequences (eg on tightly held capital partnership or joint venture structures) and the effect on the global competitiveness of private markets and the wholesale funds industry in Australia must be considered.

Initially, ASIC intends to issue a regulatory catalogue summarising fund managers' obligations at law and pursuant to related ASIC regulatory guidance, which we expect will be welcomed by industry. ASIC is also in the process of consulting on and finalising its regulatory guidance on conflicts of interest, as well as an update to INFO 251, which will outline ASIC's views on the application of the licensing exemption for authorised representatives, following the recent decision in ASIC v BPS Financial Pty Ltd (2025) FCA 74.

Beyond these imminent updates, ASIC's more far-reaching reform proposals include:

• Notification of wholesale fund establishment: requiring wholesale fund operators to notify ASIC when they establish a wholesale fund, triggering data-reporting obligations on wholesale fund operators to improve transparency for investors, ASIC and the market.
• Annual audited financial reports: extending the requirement for annual audit of financial reports of registered schemes to wholesale funds, which ASIC believes would provide better transparency and assurance about financial position, assets and risks.
• Extending RE statutory duties: ASIC believes that extending the application to wholesale fund operators of the statutory duties currently applying to responsible entities of registered schemes should be seriously considered, although we note significant duties are already imposed on wholesale fund operators (eg statutory duties under the Australian financial services licensing regime).
• Timely notification of significant events: while significant continuous disclosure obligations already apply to registered schemes that have retail investors, in the Report ASIC states it considers retail and wholesale fund operators should be required to notify ASIC and investors of significant events on a timely basis (including when redemptions are suspended) to enable ASIC to intervene and protect investors.

In addition, ASIC has used the opportunity presented by the Report to reiterate its recommendation that the current financial threshold in the wholesale investor test be increased (noting that in 2002 the definition of 'wholesale' investor test captured 1.9% of the adult population and in 2021 it captured 16.2%).

What does this mean for industry participants?

Private credit participants have been encouraged to take urgent action to benchmark their practices against ASIC's 10 principles. It will be interesting to see how ASIC intends to enforce these principles (if at all), and it may be that, in the first instance, further surveillance is undertaken to make assessments against these principles.

More broadly, beyond private credit and in the short term, ASIC will finalise its updated guidance on conflicts of interest (being a key area of surveillance focus for ASIC) and the updated INFO 251—managers and trustees are already mindful of the implications of the ASIC v BPS Financial Pty Ltd decision regarding the use of the authorised representative exemption for trustees in fund structuring, and further consultation with industry would be welcomed (if ASIC was minded to do so) before releasing updated INFO 251, given the potential implications for existing investment structures. Participants are also encouraged to focus on adopting consistent core standards of governance, effective disclosure, valuation and risk management over the next 18 months. This is not an unexpected direction of travel, given the focus of both ASIC and other jurisdictions such as the UK and the US on similar themes.

Longer term, some of the proposed legislative reforms have the potential to significantly impact the wholesale funds management industry—eg subjecting wholesale fund managers to codified statutory responsible entity duties, including the obligation to treat investors of the same class equally (without a complex array of relief or statutory modifications), may impact current market practice and fund technology, and flexibility required by sponsors to develop and innovate fund structures. Practices relating to side letters and preferential terms between managers and investors could become subject to increased regulation in much the same way the recently abandoned US private fund rules sought to do. It will also be important to ensure that any obligation to notify ASIC about the establishment of wholesale funds does not inhibit the formation of investment holding structures that need to be formed within short timeframes and be subject to heightened confidentiality. We expect participants will need to monitor actively and consider making submissions to ASIC at the appropriate time.

Data reporting and transparency

ASIC's findings

ASIC found it lags behind international peers in the data it has access to, and that the data it does have lacks the breadth, depth and frequency needed to confidently supervise private markets. While superannuation funds are required to provide detailed information on their investments to APRA, the data collection remains limited by the availability of data on the schemes that make up the underlying superannuation assets. In particular, ASIC points to seeking information such as investment strategy, investors, AUM, key third-party service providers, fund flows, types of underlying assets, key counterparties, distributions, fees, performance, leverage and redemptions as being key data points to be collected.

What ASIC plans to do next

ASIC acknowledges that increased data collection is not a 'silver bullet against bad actors', but it plans to:

• make better use of the data it does have access to (eg applying advanced analytics to uncover insights from data already received).
• pilot enhanced data reporting in 2026-27 from a small sample of the funds management sector to test the feasibility of gathering funds management data, with the pilot helping to inform options such as recurrent data collection powers for ASIC, and ASIC will work with industry and other data-gathering agencies to do this.
• continue to explore with APRA, the RBA and ABS a review of the registered financial corporations' data collection to expand its scope to encompass non-bank lenders.

What does this mean for industry participants?

ASIC is focused on a 'collect once' principle for data, which will no doubt be welcomed by industry participants, but participants will be concerned to ensure that: (a) confidentiality is guaranteed; (b) the volume and process for collection of the data is clear and streamlined; (c) given the array of private fund and investment vehicles in the market, it is clear which vehicles are captured and there is an opportunity for aggregated reporting; and (d) the type and frequency of data collection is considered in light of the fact many participants are subject to data collection through various other regulatory channels.

Superannuation

ASIC's findings

ASIC acknowledged that Australia's large superannuation industry is somewhat idiosyncratic as compared to other nations (eg ASIC notes Australia is on track to surpass the British and Canadian pension systems to become the second largest globally by 2031, despite having only the 55^th largest population), underscoring its systemic importance. ASIC considers superannuation funds uniquely positioned to positively influence markets and notes how their increasing size and investment patterns can be seen to influence a broader shift in investment strategies as funds seek to deploy capital, focusing on bigger deal sizes, diversification and enhanced returns. ASIC notes the superannuation trustee's governance around liquidity risk management and valuations are of particular importance.

What ASIC plans to do next

The roadmap implicitly acknowledges Australia's superannuation sector is already subject to extensive regulation and much of it is outside ASIC's remit. ASIC's roadmap reveals it will continue to supervise superannuation trustees and the financial reports and audit files of superannuation funds with an aim of lifting the quality of audited financial reporting. ASIC also acknowledges it is currently reviewing portfolio holding disclosure and treatment of stamp duty in RG97 with the aim of eliminating distortions to investment decision-making. ASIC doesn't suggest in the roadmap that RG97 will be reviewed more broadly (but it is something we think should be considered in light of Treasury's review of the YFYS performance test, and in the context of industry concerns as to the distortionary impacts on investment that a focus on fees rather than net returns can have). ASIC also proposes to conduct a thematic review of trustee actions to disrupt high-risk superannuation switching.

What should a superannuation trustee focus on now?

ASIC encourages superannuation trustees to continue to monitor and uplift their practices (consistent with APRA's valuation guidance and thematic reviews) and ASIC's particular areas of focus, namely:

• valuations, by doing more to ensure the valuations that are provided by external fund managers are reliable, and fair value disclosures are sufficient to enable members to understand the nature of the investments and assess the reliability of valuations (trustees are directed to REP 816).
• monitoring performance, by undertaking appropriate due diligence before offering members options via investment menus or approving options for use by advisers and monitoring underperformance, including by assessing performance against return objectives and performance benchmarks (trustees are directed to REP 779).
• transparency and disclosure, by focusing on audience, frequency and timing (among other things) when making disclosures, with trustees directed to INFO 278.

Public markets 

ASIC's findings

The Report highlights a significant trend in the decline of public market participants, with only 31 new listings in 2025 (down 80% since 2014), suggesting the ASX may no longer be a globally preferred choice for new listings. This observation aligns with global trends where public markets are witnessing a downturn in favour of private capital avenues. ASIC's insights suggest that smaller entities are increasingly reluctant to seek listings, at least in part because of the stringent standards required for public market listings, which are typically designed with large global entities in mind. This shift underscores a broader reluctance among smaller players to sign up for the ongoing regulatory and compliance demands of public markets and the availability of funding through alternative mechanisms without these requirements.

What ASIC plans to do next

In recognition of the value of active public markets, the roadmap integrates a number of key initiatives designed to stimulate public capital market activity:

• IPO red tape removal: ASIC will retain its focus on stripping red tape for IPOs, noting the two-year pilot program for fast-track IPO processes is only one component of the roadmap. ASIC is exploring methods to lower the thresholds for entry into public markets and encourage more entities to consider public listings, including streamlining policy on dual listings, modernising pre-prospectus publicity rules and reducing forecast and disclosure requirements in prospectuses. Engagement with market operators remains a priority for ASIC, including consultation regarding listing framework amendments, support for the development of new local markets and expansion of approved foreign markets for Australian company listings. ASIC has laid the groundwork for further commentary on prospectus forecasts and changes to dual listings, which it will hopefully build on early in the new year.
• Governance and reporting post-IPO: to maintain a thriving public capital market, ASIC intends to revisit regulatory settings for companies post-IPO. Reforms contemplated in this area largely fall beyond ASIC's remit. ASIC supports non-discretionary trading plans as a potential solution for facilitating share sell-downs by company insiders and appears open to the Government reducing remuneration reporting requirements—of note, it appears to support a reconsideration of the burdensome two-strikes rule. More broadly, ASIC has acknowledged the uncertainty around overlapping liability regimes as a deterrent to companies remaining publicly listed and has committed to simplification where appropriate.
• One size may not fit all: ASIC notes the onerous nature of the existing disclosure and corporate governance standards for small to medium enterprises. While these requirements are vital for maintaining investor confidence and ensuring market integrity, ASIC supports simplifying compliance processes and exploring more tailored frameworks for small to medium enterprises in mining, biotech and other innovative sectors to encourage listings and facilitate access to growth capital.

What does this mean for public markets?

While ASIC's efforts to address the supply side of IPOs are commendable, there remains a notable gap in affirmative action to address the demand side, which is significantly influenced by regulatory and compliance factors that remain a deterrent for many potential market entrants. The roadmap is ambitious and will take time to implement, however it clearly highlights that to effectively revitalise public markets, a collaborative strategy involving the ASX and other regulatory bodies will be essential.

Actions you can take now

If you are a fund manager:

• monitor for the release of updated INFO 251 and consider implications for fund structures currently in place and ensure conflict of interest policies and procedures are consistent with ASIC's ongoing consultation on updated RG 181.
• review internal compliance frameworks with a focus on governance, effective disclosure, valuation and risk management.
• watch this space for the outcome of ASIC's pilot for enhanced data reporting and consider engaging with industry consultations on the proposed reforms.

If you are a superannuation trustee: consider ASIC's report REP 816 which outlines ASIC's findings from its RSE financial reporting and audit surveillance for FY2024-25 and consider whether internal compliance frameworks and annual reporting processes are adequate, particularly in respect of valuations and audit processes.

For all market participants:

• stay informed about ASIC's ongoing work programme over the next 12-18 months.
• engage with industry consultations on proposed reforms.
• ensure compliance with existing obligations (including by reference to updated guidance and information published by ASIC) whilst preparing for potential regulatory changes.