ASIC To Replace ASX As Supervisor of Australian Financial Markets
Someone asked me what I thought about the government’s decision to give our official corporate regulator, the Australian Securities and Investments Commission (ASIC), responsibility for supervising real-time trading on Australian markets, as announced by Treasurer Wayne Swan.
That means that ASIC would be responsible for investigating and uncovering insider trading, market manipulation and other fraudulent practices that occur on financial markets.
This responsibility was previously assigned to the market operator, the Australian Securities Exchange (ASX). Since the ASX demutualised and became a publicly listed company in 1998, it has been argued that there is now a conflict of interest between its duty to supervise the markets and its duty to maximise profits for its shareholders. That was the government’s reasoning for ordering the transfer of powers.
My answer is that I agree that there is a conflict of interest, but I do not believe ASIC is competent enough to carry out its new duty. ASIC is under resourced, inefficient and has a culture of apathy and incompetence. In addition, they lack the ASX’s technological know-how. The government did not mention how much extra funding they were going to allocate, if any.
I want to hear more about plans for extra funding and a cultural purge before I would have any degree of confidence in the new arrangements.