ob体育 has today released its assessment report on the listing standards of the Australian Securities Exchange Limited (ASX), which concludes that up to this point in time ASX has met its statutory obligations.
In reaching this conclusion, ob体育 was informed by our own surveillance of ASX鈥檚 equities market and our ongoing oversight of ASX and its surveillance practices. ob体育 also engaged extensively with ASX and regulators in the United Kingdom, United States, Canada, Singapore, Hong Kong and New Zealand.
ob体育 Commissioner Cathie Armour said, 鈥楨ffective listing standards support the Australian equity market to fund growth and innovation which, in turn, promotes the wealth and prosperity of all Australians. As the listings venue for the vast majority of listed entities in Australia, ASX has a key role to play.鈥�
Listing standards are particularly important in Australia because:
- Australians have one of the highest rates of share ownership in the world (around a third of all adult Australians)
- an enormous proportion of Australians' retirement savings are invested in ASX equities (approximately $500 billion of self-managed and other superannuation fund investments)
- ASX has one of the highest numbers of publicly listed entities in the world (approximately 2,200, only around 200 fewer than New York Stock Exchange or London Stock Exchange), and
- equity funding is a major source of funding for Australian business.
The administration by ASX of its listing standards has largely served Australian businesses and investors well. However, changes in financial markets driven by developments in globalisation, competition, technology and information management, and shifting business cycles, raise key considerations for ASX.
In response to some of these, ASX has recently undertaken a number of initiatives designed to ensure its listing standards remain fit for purpose. These include:
- undertaking a risk and trend analysis of developments in its listings market
- reviewing admission and governance processes to support early identification and decision-making on an entity鈥檚 ability to meet the listing rules
- undertaking an international scan of developments in international markets to evaluate their likely impact here, and
- working with ob体育 to impose a moratorium on the listings of entities adopting a variable interest entity (VIE) structure.
ASX has also brought in additional resourcing for its listings function and has refined its referral and complaints-handling processes.
On 12 May 2016, ASX issued a consultation paper, . The purpose of the consultation is to assess the extent to which the listing rule requirements for admission continue to meet the needs of Australian investors and businesses. In most cases the requirements ASX is consulting on, including certain financial thresholds, have been in place for many years. Similar reviews of the effectiveness of the listing rules are routinely taken by major international markets.
Commissioner Armour said, 鈥楾he fast-paced nature of global and domestic financial markets underscore the importance of ASX taking a forward-looking and proactive approach to ensure its listing standards continue to deliver key benefits to Australians.鈥�
The assessment report also highlights a number of good practices ob体育 has observed, which may assist all Australian listing markets (and those considering a listing function) to ensure their listing standards continue to support markets that are fair, orderly and transparent.
Background
This report has drawn on materials, analysis and research from the period 1 July 2013 to 30 November 2015, and subsequent detailed discussions with ASX on a range of related matters.
Under the Corporations Act 2001, ob体育 may assess how well a licensed market operator is complying with any or all of its obligations. This was previously tested by way of an annual assessment against a wide set of prescribed obligations. However, due to a change in regulations, ob体育 can now more effectively target specific areas relevant to the operation of the market.
The first assessment undertaken by ob体育 under these new arrangements was on the cyber resilience of ASX and Chi-X. Report 468 Cyber resilience assessment report: ASX Group and Chi-X Australia Pty Ltd was published in March 2016.
In this report, we assessed the extent to which ASX has met its obligations to:
- operate a listing market that is fair, orderly and transparent
- have adequate arrangements to monitor and enforce compliance with its listing rules, and
- have sufficient resources (including financial, technological and human resources) to properly operate its listing market.
This is ob体育鈥檚 first report specifically on ASX鈥檚 listing standards.