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PerhapsI'm naive or simply optimistic but I wouldn't be too...

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gattertop

490 Posts.

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19/01/20

10:10

Post #: 42456198
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Originally posted by itzgr82balive: ↑

I must admit I am having a crisis of confidence in our equity regulatory systems.

After writing my letter of complaint to ASIC (and copying in the RBA and the secretary to the treasury) about the conflict of interest between the ASX and ISX and stating that "this type of very serious conflict of interest creates real distrust in our regulatory system at the very centre of our financial, trading and economic systems in Australia and a new process for the management of these entities must be put in place. All current and future Australian FinTech’s should be concerned. ASIC is the appropriate body to take over these activities."

I received what I thought was a good letter from the treasury stating that they had made ASIC aware of my complaint and were making sure that they were addressing it. Feeling good so far...

Then I got a letter from ASIC that said: (Bold my emphasis)
Thank you for your correspondencedated 5 December 2019. We confirm that you are concerned about ASX Limited’scontinuing suspension of iSignThis Limited securities from official quotation,including allegations of a conflict of interest.

ASIC values the information we receive from the public, andreports of misconduct such as yours assist us in working to build confidence inthe integrity of the capital markets.

ASIC conducts an assessment of every report of misconduct we receive. The issues youhave raised will receive careful consideration, and we have recorded them onour internal intelligence database.

... all good so far, but then...
In selecting matters for regulatory action, we consider arange of factors, including whetherthe misconduct report suggests any breaches of the law we administer, whetherwe have sufficient grounds to suspect that a breach has occurred, and whetherregulatory intervention would benefit the broader community beyond the affectedindividuals.

Please find enclosed Information Sheet 152 Publiccomment which sets out the limited circumstances when we will commentpublicly on our activities. These limitations are intended to protect theconfidentiality of information reported to ASIC and the integrity of ASIC’sinvestigation and enforcement activities. For matters involvingour market supervision, we are aware that any public comment may affect tradingin the market, and we are committed to a fair, orderly, and transparent market.

Accordingly, ASIC doesnot comment on operational matters, or our assessment of information inrelation to markets matters, and we are unable to provide further details aboutwhat, if any, action we may or may not take in relation to the concerns youhave raised. We hope you can appreciate the reasons why we do not make such comment.

So much for transparency!

My email back said that their statement "Accordingly, ASIC does not comment...." really does not satisfy, since it is exactly this lack of transparency that ISX shareholders are concerned about, especially when there is so much evidence of conflict of interest between the ASX and ISX."

But then, who am I, but a lonely retail investor and not one of the institutional brokers who put millions of transactions through the market for the (allegedly) purpose of market manipulation see:@gattertop post #42447415 with link
https://www.aph.gov.au/DocumentStore.ashx?id=b7dfed09-3374-4c6f-8a1c-7ac17aeeeeb1&subId=31219.

Am I really under the illusion that I can really effect change?

No. I don't think so.

Expand

PerhapsI'm naive or simply optimistic but I wouldn't be too disillusioned by ASIC'sresponse.

ASIC is charged with maintaining the integrity of our financial markets. Theylicense and regulate the ASX. If ASIC was to comment publicly about allegedmisconduct of the ASX it could undermine confidence in the market. In thatsense I can understand why they couldn't be drawn into a public discussionabout your concerns or the action they may be taking as a consequence.

More generally, I'm not convinced the relationship between ASIC and the ASX isall that flash.

Weknow ASIC has been concerned about the potential for conflict between the ASX'scommercial and regulatory roles for many years.
https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Completed%20inquiries/2002-04/econ_stock/report/c03?print=1

https://www.copyright link/companies/asic-says-asx-should-do-more-to-remove-conflict-of-interest-perception-asic-says-asx-must-do-more-to-remove-conflict-of-interest-perception-20140805-jkblz

So I wonder what ASIC make of the ASX’s commercial expansion into new areasof business. Surely a more complex and entrepreneurial ASX simply creates morepotential conflicts and potential for scandal?

ASICmight find it a little galling watching their high paid colleagues at the ASX pushthe envelope on potential conflicts when it will be ASIC that cops the flackfrom parliament when the sh*t hits the fan.

(ASICboss earns $800K. ASX boss $3.9m. ASIC department heads approx $400K. ASX departmentheads $1.1m. I wonder if that grates on them a little?)

ASIChas copped a lot of criticism in the past decade over alleged regulatory andoversight failings. From the CBA/financial advisory scandal back in 2007through to the Banking Royal Commission in 2018; ASIC invariably cops a sprayin the media and parliamentary inquiries.

I think the Royal Commission was a watershed moment in terms of how we view thebanks. The blowback on ASIC has also seen them adopt a far more aggressivestance on regulation and prosecution.

https://www.copyright link/companies/financial-services/asic-spruiks-spike-in-active-investigations-20190219-h1bfqa
It’snot too hard to imagine that a more aggressive approach may extend to theiroversight of the ASX.

Against that background we have the ISX suspension. The ASX’sbehaviour in relation to the management of the suspension looks pretty appalling (IMO). I think(hope?) ASIC will be highly sensitive to the public complaints.

ISX Price at posting: $1.07 Sentiment: Buy Disclosure: Held
23 Upvote

3 Great analysis

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