The Australian Securities & Investments Commission has released a discussion paper on the dynamics between public and private markets and is seeking submissions and 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.
As private markets grow, ASIC is increasing its supervision of private equity funds, private credit funds and their advisers. In 2025, ASIC’s thematic surveillance of private equity and private credit funds is focusing on fund governance, valuation practices, management of conflicts of interest and fair treatment of investors. Additionally, for retail private credit funds, ASIC will test compliance with disclosure and distribution obligations.
ASIC has today announced its preliminary views on the opportunities and risks emerging from shifts in public and private capital markets and called for feedback and debate on key questions as part of the discussion paper.
The paper, Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets (Download DISCUSSION PAPER), opens a discussion on ASIC’s regulatory approach and seeks actionable ideas for it to consider to enhance the operation of Australia’s capital markets.
The paper explores the changing dynamics in capital markets, in Australia and abroad, including declining listings on public markets, the rapid growth in investment capital allocated to private markets and the influence of superannuation funds on markets.
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ASIC Chair Joe Longo said the discussion paper was one of the most significant initiatives of the year for the regulator.
“ASIC is determined to achieve dual goals with this paper by ensuring Australia’s markets are attractive to companies and investors while protecting against risks,” Mr Longo said.
“Public and private markets support one another, and both are critical to our economy, so it’s important we approach this from both an opportunity and risk perspective. The critical point for ASIC is whether there is a need for interventions to address risk or adjustment to how regulation operates to take advantage of opportunities important for the attractiveness of our capital markets.
“We can’t be complacent about the future of Australia’s public equity markets. While history tells us that the current downturn in Australian IPOs and public companies is likely cyclical, deterioration in the quality, diversity and depth of public companies would have significant adverse effects on the economy and on investors’ participation in it. While we don’t see regulatory settings as the dominant factor here, there may be opportunities to adjust in order to improve the attractiveness of our markets.
“We are also concerned about the private credit market. While it does not appear to be systemically important in Australia, failures are on the horizon, and at current volumes it is untested by prior crises.
“We are keen to understand how the growing dominance of superannuation in Australia’s economy is influencing our markets, given its crucial role in securing our financial wellbeing on retirement.
“We note our international peer regulators have access to more reliable and recurrent data on private markets to enhance their transparency. This makes it easier to identify risks as well as opportunities. At present, ASIC’s data and information gathering powers are inefficient and incomplete. We simply can’t do our job properly if we are in the dark,” Mr Longo said.
Internationally, regulators are reviewing their regulatory settings in response to these changes in capital markets, with some focusing on strengthening their public markets and others moving to address vulnerabilities identified with transparency and investor protection in private markets. Key risks of concern include opacity, valuation uncertainty, conflicts of interest, illiquidity and leverage in private markets, which includes private equity and private credit markets.
Industry Response
Pete Robinson, Head of Investment Strategy, Fixed Income at Challenger Investment Management, said:
“ASIC was explicit in stating that they will be increasing their focus on private credit, repeatedly referencing opacity, valuation uncertainty, conflicts, leverage and illiquidity as key risks. With respect to valuation they were clear that in their view that if public market valuations are declining then this should be reflected in some way in private market valuations, a view we share but many domestic managers do not.
“Investors should be aware that this report won’t close the book on the governance questions surrounding private credit. The approaches taken by firms around treatment of upfront fees, management of conflicts of interest and valuation practices will continue to come under scrutiny both by regulators, media and other investors in the fund.”
Alan Greenstein, CEO and co-founder of Zagga, said:
“As private markets enjoy record growth and huge inflows switching from public markets, the sector has understandably captured the attention of regulators, both here and in many other jurisdictions. The regulators naturally want more insight into the investments, and of course, investors also appreciate transparency.
“As ASIC rightly points out, investors vary from individuals to Australia’s largest super funds. This creates complexity because their level of sophistication, risk appetite, and capital allocations are vastly different. When it comes to regulation, one size does not fit all and it’s important to get the right regulatory oversight and mechanisms in place.
“I believe that credible private market players would be fully on board with greater transparency, minimum best practice standards, and a level playing field. Ultimately, with relevant, appropriate, fit-for-purpose governance.
“I believe the regulator’s discussion paper is an opportunity for the industry to take initiative and design a code of conduct that ensures widespread best practice and covers pertinent issues like valuations, pricing, and liquidity. A code of conduct would go a long way in ensuring integrity, trust, and credibility with both investors and the regulator.
“Zagga’s is a specialist manager, focused on real estate private credit, working only with sophisticated investors, operating a conservative, fully licensed and regulated entity. If invited for comment as it relates to our specialisation, we would be open to submitting a detailed response.”
