DP Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets

Released 26 February 2025. Feedback on the discussion questions closes 28 April 2025.

This discussion paper seeks engagement from participants in Australia’s capital markets, their advisers and other interested persons on important issues and implications arising from evolving changes in Australia’s capital markets.

To provide feedback on any or all of the discussion questions, send your submission to markets.consultation@asic.gov.au by 5pm on 28 April 2025.

Download

Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets (PDF 8 MB)

Summary of feedback themes

Structural and cyclical factors are shaping both public and private markets

Industry feedback was mixed on whether the decline in initial public offerings (IPOs) and listed companies was structural or cyclical, with most accepting some structural elements.

Most recognised the growth in private markets as a significant and structural global trend. While this growth was recognised as a positive trend, signalling investor confidence in the existing regulatory framework, there was also feedback that many companies choose to remain or go private over listing for longer term growth opportunities.

Public market adjustments would improve and enhance their attractiveness

There was broad agreement public markets play a critical role in Australia’s economy for primary and secondary capital raising, price formation and accessible participation.

Feedback received offers a range of ideas to adjust regulatory settings and to enhance the appeal of public markets for companies and directors. Some suggestions fall within ASIC's remit, with others requiring broader policy considerations and engagement across Government, other agencies and market operators.

Ideas included fostering competition between markets, streamlining IPOs and disclosure requirements, simplifying governance and director responsibilities in regard to a small number of key material differences from the private market, reviewing settings for small to medium companies becoming and remaining a public company, amending listing rules such as free float requirements, and facilitating more foreign listings and share structures. They particularly focused on adjustments which support and encourage companies to adopt longer term perspectives in a listed context.

Stakeholders requested ASIC look at the impact of ASX Corporate Governance Principles and prudential governance standards in setting expectations for listed companies of all sizes and sectors. Some suggested ASIC focus regulation on specific company features like size and sector, rather than on their listed or private status.

As a first step, ASIC is considering regulatory changes to streamline the IPO process, and other ideas to make staying listed easier.

Private markets are here to stay and grow, there is an acknowledgement of the need for any regulatory guidance to be measured, working closely with industry and aligning to international standards

Feedback acknowledged private markets provide both investors and issuers with significant benefits, which are not always accessible in public markets. Stakeholders reinforced ASIC’s view that private markets play an important capital allocation function that needs to be complementary to public markets, thus supporting the attractiveness and efficiency of Australia’s economy.

Many respondents suggested private markets are largely meeting institutional investors’ needs and current laws are generally promoting good outcomes for these investors. While some cautioned against increased regulation of institutional participants in private markets, there were recommendations for additional supervision when it comes to valuation of assets, management of conflicts of interests, management of information, meaningful disclosure of fees and risks, and fair treatment of different investor types, as well as further information from ASIC on what good could look like. There were also recommendations to align practices through existing standards (domestic or international), or through ASIC guidance.

Many noted private market offerings are increasingly targeting retail and less sophisticated wholesale investors, requiring closer regulatory scrutiny, particularly in private credit. Some stakeholders advocated for raising the wholesale investor threshold to mitigate risks for retail investors in traditionally wholesale markets.

Overall, respondents said the regulatory framework is generally sound, however there is scope for some targeted uplift and for more active and ongoing monitoring and supervision in wholesale and retail private markets.

ASIC is working with experts to gain deeper understanding of the issues and will continue to engage with industry on their feedback. It will take a measured approach to promote the quality and integrity of private markets with a focus on investor protection and market integrity.

There were also comments encouraging greater efficiency and transparency of corporate debt markets, which ASIC will consider in due course.

Private credit is good for the economy and investors, if done well. There may be work to do to ensure it is sustainably done well

Respondents outlined the growing availability of private capital has met a real need, and if done well, private credit is good for both sides of the economic equation – investors and borrowers - and can complement the banking system.

However, there were calls for increased supervision of the Australian private credit market due to its opacity, rapid growth, and untested status in a downturn. The increasing exposure of retail investors to private credit markets was also called out for closer examination following concerns for potential non-investment risk-driven losses (e.g. through illiquidity, conflicts of interest and opaque fees).

Many stakeholders highlighted the need for more transparency for retail investors, and some considered it necessary for wholesale investors and the broader market. The private credit industry showed willingness to engage with ASIC for further insights and potential guidance and an openness to implementing more consistency in standards and practices across the industry.

ASIC’s private credit markets funds surveillance is underway in wholesale and retail private markets to assist the agency to better understand current disclosure, distribution, conflicts of interest, valuation, conduct practices and use of ratings. This will be supplemented by insights from industry experts to inform the actions the agency will take to maintain integrity, protect investors and promote the quality of Australia’s private credit industry.

Superannuation is a mature and significant force in Australia and a significant and structural influence in markets and investment

Submissions recognised the growth and role of superannuation in changing Australia’s institutional investor landscape. Respondents noted the existing regulatory settings have contributed to the strong growth of the sector but also to its growing investment and asset management maturity, with a heightened focus, also, on valuations and related liquidity management of private markets portfolios and holdings.

It was also recognised the super industry plays an important role in intermediating retail investor participation in capital markets, and that APRA has an important role in its setting and supervising standards for superannuation trustees.

Respondents said retail investors have become exposed to the risks and opportunities of private markets and, as such, rely on good and clear disclosure about the investment strategies they may choose. And institutional investors - such as super, and fund managers - are focused on improving measures to support market integrity, such as information sharing and the management of conflicts and risk. However, there was appetite for more insight on what good looks like in terms of governance, disclosure and conduct practices. Super industry respondents reinforced the importance of a healthy public market and their awareness of their stewardship role and the impact it has on changing capital market dynamics.

ASIC will continue to engage with the super industry and APRA in a complementary manner, and reflect on the role and impact of super in relation to Australia’s financial markets. The agency will examine investment-related disclosures to members and industry practices, which will help inform its response to both the super and non-super sectors. Transparency requirements should only build on existing disclosures and not duplicate them.

More to do on data and transparency of private markets including in dimensioning the market itself and learning from international practices

Feedback suggested ASIC has underestimated the size of private markets in Australia, with strong consensus that regulators need to be well informed about Australia’s markets to do their job effectively, and that more standardised transparency is needed for investors.

There was recognition that this isn’t just an issue for regulators. The market itself will need more transparency as it grows and matures in order for it to maximise efficiency and integrity. Investors and participants noted that greater transparency does not only create confidence but will lead to greater participation and access.

There were requests for consolidation and reconciliation of information already available to ASIC, APRA and other agencies.

ASIC will work with market experts to better understand transparency and data requirements in peer global jurisdictions such as the USA, Singapore and the UK, and how best to set the Australian market up for success.

Submissions

(non-confidential submissions)