ASIC scrutinises fund trading practices

By Rebecca Evans

The Australian Securities andInvestments Commission (ASIC) is satisfied Australian fund managers are not breaching the Corporations Act through late trading or market timing, despite recent findings to the contrary by its US counterpart, the Securities and Exchange Commission (SEC).

After writing to more than 70 fund managers and conducting a number of site visits, ASIC chairman Jeffrey Lucy says no evidence of systemic or large-scale use of improper investment practices was uncovered in the domestic asset management industry.

“While a small number of minor issues were identified, the fund managers concerned have taken steps to rectify them and to implement enhanced monitoring and compliance procedures,” Lucy says.

The ASIC review was prompted after the SEC in the US reported some fund managers had entered into a set of trading arrangements that appeared to benefit certain large investors at the expense of other clients.

ASIC compared its findings with relevant international regulators including the SEC, the UK Financial Services Authority and the Ontario Securities Commission in Canada, and will continue to monitor international developments regarding industry best practice on the matter as well as international developments relating to the regulation of managed funds.

“Although recently there have been a number of reforms suggested for the US mutual funds industry, it is important to note that many of these measures, such as disclosure of fees and buy/sell spreads, are already current practice in Australia,” Lucy says.