Here’s the big test for the new market trading monitoring and control system to be run by the sluggish ASIC from the third quarter of next year.
Will it be as transparent and open about its regulatory actions as the ASX has become this year?
So far, you’d have to say that ASIC is almost invisible, almost absent from the regulatory debates in this country.
In early July in its June quarter market activity and surveillance report, the ASX said: “There were 18,986 alerts in the quarter. This represents a fall back to more normal levels and is well below the high numbers seen in the December quarter, which was a period of extreme market volatility”.
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“As at the end of June 2009, Surveillance had 21 open inquiries — 14 matters related to insider trading, five to market manipulation, one to disorderly market and one to trade reporting.”
The ASX said there were 31 insider trading inquiries during the year and the number in the final quarter of this year of 12 was up on the seven in the final quarter of last year.
“The increase in the number of potential insider trading referrals may be partly due to an increase in the level of corporate activity. The June quarter saw the announcement of some major takeovers. Trading prior to corporate transactions is closely examined by ASXMS,” the ASX said.
There were 224 continuous disclosure queries and 243 price queries during the quarter. The results are in line with previous quarter’s activities.
During the quarter, eight entities were suspended by ASXMS for breaching the listing rules compared to 32 entities suspended the third quarter this year for the same reason. The previous quarter’s result included 23 entities automatically suspended for not lodging financial accounts by the due date.
Now some of those responsibilities, such as the continuous disclosure queries, will remain with the ASX, as will companies being suspended for not lodging reports (quarterly or interim or final) by the due dates.
ASIC will get control of the alerts (most of which are triggered by unusual price movements).
But we have seen it time and again in the past year ahead of companies reporting poor results or revealing plans to raise new capital. Some share prices fall, some rise in unexplained fashion.
The other is the timeliness and speed of price queries and linking them from ASIC to any work at the ASX on statements and other announcements from listed companies.
ASIC doesn’t move fast, no matter what it claims and in trading, querying companies needs speed and accuracy first up and a good eye for market trends.
There’s a lot of detail to be sorted out, as this press conference with Mr Bowen late yesterday revealed.
For example, Mr Bowen said in answer to a question about transparency on insider trading allegations:
Well, ASIC will be as transparent as is appropriate and they will obviously have a good look at their new responsibilities.
They’ll need some time to work out their guidelines and their protocols and they will — independent of Government — make further announcements about how they intend to deal with their new responsibilities. That’s a matter for them.
The Government should direct ASIC to open up and join the real world.
ASIC is the least transparent of our regulators. APRA and the Reserve Bank reveal more about their thinking and administrative moves than ASIC does.
You have more chance of reading or seeing a speech by RBA Governor Glenn Stevens, or APRA chairman John Laker, than you do from hearing a similar public commentary from ASIC chair Tony D’Aloisio.
Mr Stevens fronts the House of Representatives Economics Committee twice a year. In contrast the ASIC head doesn’t appear except at Senate Estimates, as does Dr Laker. Dr Laker doesn’t talk about prudential matters, but Mr Stevens does answer questions about interest rates to the best of his ability, without too much disclosure of the bank’s thinking.
The ASIC chairman at least does the occasional interview where he submits himself to questioning, but then Glenn Stevens and other senior officials at the RBA, always make themselves available for Q&A sessions after their speeches or comments. Senior RBA officials also do media interviews.
ASIC is well behind understanding the need for public commentary and explanation. Replicating what the ASX released in early July will be the first test for improving ASIC disclosure under the new regime.