ob体育 has announced its preliminary views on the opportunities and risks emerging from shifts in public and private capital markets and called for feedback and debate on key questions as part of a discussion paper launched today.
The paper, Australia鈥檚 evolving capital markets: A discussion paper on the dynamics between public and private markets (DISCUSSION PAPER), opens a discussion on ob体育鈥檚 regulatory approach and seeks actionable ideas for it to consider to enhance the operation of Australia鈥檚 capital markets.
The paper explores the changing dynamics in capital markets, in Australia and abroad, including declining listings on public markets, the rapid growth in investment capital allocated to private markets and the influence of superannuation funds on markets.
ob体育 Chair Joe Longo said the discussion paper was one of the most significant initiatives of the year for the regulator.
鈥榦b体育 is determined to achieve dual goals with this paper by ensuring Australia鈥檚 markets are attractive to companies and investors while protecting against risks,鈥� Mr Longo said.
鈥楶ublic and private markets support one another, and both are critical to our economy, so it鈥檚 important we approach this from both an opportunity and risk perspective. The critical point for ob体育 is whether there is a need for interventions to address risk or adjustment to how regulation operates to take advantage of opportunities important for the attractiveness of our capital markets.
鈥榃e can鈥檛 be complacent about the future of Australia鈥檚 public equity markets. While history tells us that the current downturn in Australian IPOs and public companies is likely cyclical, deterioration in the quality, diversity and depth of public companies would have significant adverse effects on the economy and on investors鈥� participation in it. While we don鈥檛 see regulatory settings as the dominant factor here, there may be opportunities to adjust in order to improve the attractiveness of our markets.
鈥榃e are also concerned about the private credit market. While it does not appear to be systemically important in Australia, failures are on the horizon, and at current volumes it is untested by prior crises.
鈥榃e are keen to understand how the growing dominance of superannuation in Australia鈥檚 economy is influencing our markets, given its crucial role in securing our financial wellbeing on retirement.
'We note our international peer regulators have access to more reliable and recurrent data on private markets to enhance their transparency. This makes it easier to identify risks as well as opportunities. At present, ob体育鈥檚 data and information gathering powers are inefficient and incomplete. We simply can鈥檛 do our job properly if we are in the dark,鈥� Mr Longo said.
Internationally, regulators are reviewing their regulatory settings in response to these changes in capital markets, with some focusing on strengthening their public markets and others moving to address vulnerabilities identified with transparency and investor protection in private markets. Key risks of concern include opacity, valuation uncertainty, conflicts of interest, illiquidity and leverage in private markets, which includes private equity and private credit markets.
Feedback on the discussion paper questions is due by 5pm on 28 April 2025. Details on responding can be found in the discussion paper.
Downloads
- Discussion paper Australia鈥檚 evolving capital markets: A discussion paper on the dynamics between public and private markets
Background
As Australia鈥檚 financial markets regulator, ob体育 has been engaging with a wide spectrum of perspectives through panels, forums and structured engagements on the evolving public and private market dynamics.
In conjunction with this paper, ob体育 commissioned a research report by Dr Carole Comerton-Forde, Evaluating the state of the Australian public equity market: Evidence from data and academic literature (REP 807), which has informed ob体育鈥檚 approach in this paper.
As private markets grow, ob体育 is increasing its supervision of private equity funds, private credit funds and their advisers. In 2025, ob体育鈥檚 thematic surveillance of private equity and private credit funds is focusing on fund governance, valuation practices, management of conflicts of interest and fair treatment of investors. Additionally, for retail private credit funds, ob体育 will test compliance with disclosure and distribution obligations.
The discussion paper follows ob体育鈥檚 report, Equity market cleanliness snapshot report (REP 786), released in July 2024. The market cleanliness report showed Australia鈥檚 equity markets have continued to operate with a high level of integrity and remain consistently among the cleanest in the world. The report provided a broader context for the findings in Report 787 Review of Australian equity market cleanliness: 1 November 2018 to 30 April 2024 (REP 787).
ob体育鈥檚 Moneysmart website has information for consumers about how to to reach their financial goals.