THE HEAD of the Australian Securities Exchange said this month all players in the market were being tested by the loss of liquidity and investor confidence now hitting world markets, including the regulators.
Robert Elstone, CEO and managing director of the ASX, told a joint ASX-ASIC seminar in Perth on disclosure and corporate governance, there are lessons to be learned by super funds, brokers and others on spreading false rumours, for companies on director’s financing, and for ASIC and ASX.
“There are lessons for trustees of super funds regarding the ease with which custodial stock lending arrangements occur; for brokers and other organisations that may be predisposed to act on or use the financial media to circulate false rumours; for companies about the materiality of corporate and director-based financing arrangements; and for regulators like ASX and ASIC in ensuring that existing regulations are enforced, but at the same time, avoiding heavy-handed regulatory responses that could make our markets less efficient,” he said.
He pointed out that only around a dozen companies had been in trouble in recent months, however, compared to a total of 2,200 listed on the ASX.
“That is not to downplay the seriousness of the issues that surround those companies, but we should not lose perspective on the functioning of the securities markets overall, particularly when regard is had to the unprecedented scale of the ‘fear factor’in global credit markets which is fuelling the recently termed and abhorrent phenomenon of ‘rumourtrage’,” Elstone said.
He defended the operation of the ASX, saying its risk management measures had withstood record trading volumes and said its markets supervision arm would increase from 84 staff in June last year to 105 by June this year.
From July 2007 to February 2008, he said the ASX markets supervision division had referred 17 possible cases of insider trading to ASIC, 13 possible breaches of continuous disclosure and 15 possible cases of market manipulation.
The ASX markets supervision division is also reviewing all annual reports of listed companies and checking them against the ASX corporate governance rules and recommendations. Results of the review will be released in June and in May, the ASX Corporate Governance Council will consider directors trading in securities of the companies on which they are a board member.