ASX chief compliance officer Daniel Moran told The Australian on Thursday that while many companies kept their investors informed, some fell far short.
Mr Moran said the ASX was looking to expand its use of censure powers, previously exercised only sparingly by the market operator.
These powers, only introduced in December 2019, allow the ASX to issue formal public warnings when a company has fallen far short of its standards, allowing it to criticise responses from a listed operator.
Mr Moran, a lawyer who in October 2022 took on the job of keeping Australia’s largest market clean, said the ASX was also looking at stepping up writing to boards of listed companies over concerns with market disclosure.
He said the ASX would issue cautions if disclosures were “not up to scratch”, suggesting what action could or should be taken. “We might also impose a requirement under the rules to engage a third party to do a review or issue a report or do an audit and put in place new disclosures policies,” Mr Moran said. “The thinking is that all of these things, particularly in the case of a censure, shine a light on the market so that investors understand that a company and its management aren’t doing what they ought to be.”
Mr Moran said these powers put a burden on companies and management.
The 2019 move to give the ASX powers to censure listed companies brought the market operator into line with other offshore exchanges.
The ASX can also refer bad behaviour to the Australian Securities & Investments Commission, which was handed many of the enforcement powers previously held by the market operator in 2010.
This saw ASIC take on supervision of licensed financial markets, with 23 staff leaving the ASX for the regulator.
Mr Moran said the ASX, which routinely spoke with ASIC, referred matters to the regulator when a company met its internal tests of a “significant breach” of the listing rules or the Corporations Act.
This involved the ASX handing ASIC a brief, which Mr Moran noted was similar to those exchanged between a solicitor and barrister.
But he said the ‘‘conversion rate’’ for many of the matters reported by ASX to ASIC was “quite low”, as the threshold for the market operator to raise matters was often lower than the regulator’s own tests.
ASIC has previously been criticised for failing to investigate or prosecute many of the matters referred to it, with a Senate inquiry taking aim at the regulator over its track record.
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