ASIC’s latest market cleanliness report has shown Australia’s equity markets continue to operate with a high level of integrity and remain consistently among the cleanest in the world.
ASIC Chair Joe Longo said, ‘Clean financial markets are essential for the financial wellbeing of Australians and fundamental to an efficient economy. They enable business to raise capital and manage risk and give investors confidence to invest.
‘Protecting and enhancing the integrity of Australia’s equity markets continues to be a priority focus for ASIC.’
In a clean market, there should not be share price run-ups before material information is released. Trading ahead of public release may indicate some parties are profiting unfairly by using information that is not generally available to the market.
The report, Equity market cleanliness snapshot report 786 July 2024 (REP 786) found in the five-year period up to 30 April 2024, there were two periods of temporary deterioration in market cleanliness. The first during the COVID-19 pandemic when global markets experienced high market volatility and trading, and again in late 2023 as corporate activity increased. In both instances ASIC acted quickly to address the harmful conduct.
Our regulatory interventions to address the deteriorations included targeting pump and dump activity, intervening on chat rooms, reviewing ‘finfluencer’ activity and undertaking targeted reviews where we observed leaks ahead of market announcements.
To protect market integrity, ASIC uses a combination of real-time trade surveillance data, award winning analytical tools and human expertise to seek out and identify potential misconduct. To enhance our enforcement capabilities further, we are establishing a dedicated criminal investigation team to swiftly progress insider trading investigations and increase the number of criminal briefs we refer to the Commonwealth Director of Public Prosecutions.
In the 2024 financial year, ASIC almost doubled the number of new insider trading investigations commenced over the previous financial year.
‘We will continue to invest in data and technology to hunt and detect all forms of market misconduct. As our financial landscape evolves we will expand our market cleanliness work to capture private markets and products in the coming year,’ Mr Longo concluded.
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No trade is worth prison time
Background
Equity market cleanliness snapshot report 786 July 2024 (REP 786) summarises and provides a broader context for the findings in Report 787 Review of Australian equity market cleanliness: 1 November 2018 to 30 April 2024 (REP 787). It also sets out our enforcement track record in detecting and prosecuting insider trading matters and information leaks prior to material, price-sensitive announcements, and sets expectations for firms to protect confidential information.