Disclosure on debentures improving
Tony D'Aloisio
New regulations formulated to improve disclosure in relation to unlisted and unrated debentures are proving effective, with all issuers now either providing, or in the process of providing, retail investors with detailed reports on how their investments meet a series of benchmarks.
These are the findings of an Australian Securities and InvestmentsCommission (ASIC) report on the progress of its ‘three-point action plan’ to provide retail investors with better information about the risks associated with debentures. The plan covers debenture issuers in the retail sector and investor education.
ASIC chairman Tony D’Aloisio said Report 127: Debentures — Improving disclosure for retail investors shows the new regulations, released in October last year, have greatly improved disclosure.
“Investors are now presented with improved information on the fundamentals of this type of investment. This information will assist them to make choices about their investment and better assess risks, particularly the risk of capital return,” he said.
ASIC has also released a report on its research into the unlisted, unrated debenture market.
Report 126: Understanding investors in the unlisted, unrated debenture market states that nearly half of investors in these types of products aim to generate income for their retirement or long-term savings. Investors cited the most important features of their investments as the return and interest rates, the perceived low level of risk and the protection of their funds.
ASIC plans to use the results of the research to improve investor education. The corporate regulator indicated it will continue to monitor the disclosures made by debenture issuers over the next 12 months and provide another progress report on the three-point action plan in April next year.
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