The Australian Investments and Securities Commission (ASIC) has asked market operators to exclude any new managed funds that fail to disclose their daily portfolio holdings and use internal market makers while it conducts a review.
Internal market markets occurred when the responsible entity of a managed fund, usually one which was actively managed, submitted bids and offers itself or engaged a transaction agent to do so. They made up around six per cent of exchange traded products by funds under management.
ASIC said the problem had ‘changed materially’ as a result of the substantial market in active funds, innovation in fund structures and changes to the composition of market makers for exchange traded managed funds.
ASIC said it intended to review the regulation for these types of funds so asked for a pause on new admission of these products until further notice. Existing actively managed exchange traded managed funds were not impacted by the move.