The Australian Securities and Investments Commission (ASIC) has released its report on market practices in debt capital markets and outlined its expectations for Australian financial service licensees (AFSLs).
Report 668 ‘Allocations in debt capital market transactions’ (REP 668) stated it expected AFSLs to:
- Identify and manage potential conflicts of interest when making allocation recommendations;
- Have effective policies and procedures for identifying and managing confidential and market-sensitive information;
- Have processes to ensure that information provided to issuers and investors (including updates) was accurate and not misleading or deceptive; and
- Have active and effective supervision and monitoring for DCM transactions.
The regulation followed a report by the International Organisation of Securities Commission (IOSCO) issued this week which helped regulators to identify and address conflicts of interest in the role of intermediaries in debt capital raisings. This could include pricing of debt securities, quality of information provided to investors and allocation of debt securities.
ASIC said the better practices outlined in REP 668 were “consistent” with the IOSCO report.
ASIC Commissioner, Cathie Armour, said: “All licensees should review ASIC’s findings and consider whether their controls for the allocation process in DCM transactions – including policies, procedures and monitoring – are appropriate and sufficiently robust”.
