The Australian Securities and Investments Commission (ASIC) has reaffirmed the strong integrity of Australia’s equity markets in its latest market cleanliness report, ensuring that Australians can continue to invest with confidence. According to ASIC’s Equity Market Cleanliness Snapshot Report published in July 2024, the country’s equity markets maintain a high standard of integrity, consistently ranking among the cleanest in the world.
ASIC Chair Joe Longo emphasised the importance of clean financial markets, stating, “Clean financial markets are essential for the financial wellbeing of Australians and fundamental to an efficient economy. They enable business to raise capital and manage risk and give investors confidence to invest.”
The significance of market cleanliness
Market cleanliness refers to the absence of improper or unethical trading behaviours, such as the release of material information before it is made public. In a clean market, there should be no significant price movements before the release of such information, as this could indicate that some investors are profiting unfairly by exploiting confidential data. Protecting and enhancing the integrity of these markets is a top priority for ASIC.
Report findings and challenges
The report highlighted that over the five-year period leading up to April 30, 2024, Australia’s equity markets experienced two brief periods of deterioration in market cleanliness. The first occurred during the COVID-19 pandemic, when global markets were marked by high volatility and increased trading activity. The second instance was in late 2023, coinciding with a surge in corporate activity.
In both cases, ASIC responded swiftly and decisively to curb any harmful behaviour. Regulatory interventions included targeting pump-and-dump schemes, monitoring chat rooms, reviewing the activities of financial influencers, and conducting targeted reviews to address potential information leaks ahead of market announcements.
ASIC’s commitment to market integrity
ASIC’s commitment to maintaining market integrity is underpinned by a combination of advanced technology and human expertise. The organisation employs real-time trade surveillance data, cutting-edge analytical tools, and a dedicated team of experts to detect and prevent potential misconduct. To further bolster its enforcement capabilities, ASIC is establishing a specialised criminal investigation team focused on accelerating insider trading investigations and increasing the number of criminal cases referred to the Commonwealth Director of Public Prosecutions.
In the 2024 financial year, ASIC nearly doubled the number of new insider trading investigations compared to the previous year. This underscores the regulator’s ongoing efforts to enhance market cleanliness and protect the interests of all market participants.
Looking ahead
As Australia’s financial landscape continues to evolve, ASIC is committed to expanding its market cleanliness efforts to include private markets and products in the coming year. “We will continue to invest in data and technology to hunt and detect all forms of market misconduct,” Mr. Longo concluded.
This proactive approach ensures that Australia’s equity markets remain a safe and trustworthy environment for investors, businesses, and the broader economy.
