ASIC: Advancing Australia’s Public And Private Markets: Progress Update

Australia’s capital markets are strong, and they are adapting to meet the future needs of our economy. Within this ecosystem, private markets are rapidly expanding and unlocking new investment opportunities that support an attractive and efficient national economy.

These developments require strong integrity and practices to deliver sustainable long-term growth and support informed and confident participation by investors. Public markets are facing increasing pressures, from global competition to changing investor preferences. While regulation is not the primary driver of market attractiveness, ASIC is enhancing specific regulations to support Australia’s market appeal.

To inform ASIC’s response to the discussion paper on evolving capital markets, released in February of this year, we met with a wide range of industry representatives through panels, forums, a symposium and various other engagements. These engagements and the submissions received informed this progress update.

Private markets benefit Australia – when ‘done well’

Responses to the discussion paper confirmed our view that the growing availability of private capital has met a real need. If ‘done well’, private credit is good for both sides of the economic equation – investors as well as borrowers – complementing the banking system and providing further opportunities for innovation, employment and growth.

In response to the pace of growth, ASIC commissioned a paper on Australia’s private credit funds sector (REP 814). This paper outlines foundational insights on the size and nature of the sector, including examples of better and poorer practices and areas for industry and regulator attention.

REP 814 notes the difficulty in obtaining definitive data on Australia’s private credit sector. The sector is currently estimated at around A$200 billion, approximately half of which is estimated to be invested in real estate–related assets – a feature that distinguishes Australia from international markets.

This exposure is characterised by significant investment in higher-risk real estate construction and development and, concerningly, involves a concentration of less experienced investors.

REP 814 recognises the important role of private credit in the Australian economy and identifies some good practices being followed, as well as entities that apply global standards in their Australian operations.

REP 814 is assisting us to better understand current disclosure, distribution, conflicts of interest, valuation and conduct practices and the use of ratings in the sector. It identifies areas that need improvement and both industry and regulatory attention.

ASIC advocates for consistent adoption of good practices to promote the investor confidence and integrity necessary to sustain a well-functioning private credit market. Important practices identified by the paper include:

• regular reporting of fund composition and independent loan valuations
• disclosure of:
  • whether credit ratings are internal or third party (if used)
  • the scale of mezzanine debt and equity holdings
  • all manager fees and earnings (including any interest earned)
  • liquidity risk management and leverage, and
  • the fund’s relevant policy
• transparency of related-party or inter-fund transactions, along with independent review
• consistency in the use of investment and real estate terminology.

REP 814 also outlines concerning practices and areas requiring regulatory focus. These include:

• remuneration and fee structures involving potential misalignment between managers and investors, and structures that often fail to quantify and make readily observable the true cost of managing the fund
• related-party transactions and governance arrangements, which need to adequately address fund managers:
  • lending to related parties
  • holding debt and equity in the same entity via the fund, and
  • transferring investments between funds managed by the same manager
• valuation practices that determine the frequency, methodology, beneficiary and independence of valuation, and recognition of impairments
• liquidity and adequate disclosure about opportunity and process based on the type of fund (closed-end or open-end), as well as facilitation of liquidity and addressing the risk of liquidity mismatch
• investment reporting and mixed reporting across the market, leading to lack of visibility and investment exposure
• definitions and key terms, including the need for clear, concise and consistent use of terms such as ‘investment grade’, ‘security’, ‘loan to value ratio’ and ‘senior debt’, and
• concentration and the risk of an unknown amount of debt or level of credit risk – particularly in real estate – as well as unknown levels of exposure, especially for retail investors.

Early surveillance findings support opportunities for improvement

ASIC has conducted surveillance on the private credit funds sector, and our early findings align with the better and poorer insights from the paper – particularly those relating to valuations, liquidity and transparency. Some of the poorer practices are potentially inconsistent with financial services law and ASIC guidance, including the requirement to provide financial services efficiently, honestly and fairly, and to avoid misleading or deceptive statements.

We do not hesitate to use ASIC’s regulatory and enforcement tools when we identify misconduct. We have already taken action, issuing stop orders on several target market determinations due to poor disclosure and distribution of retail private credit funds. We have also commenced enforcement investigations for instances of more egregious conduct.

The insights and observations we have already gathered are informing ASIC’s ongoing and planned surveillance activities. We will share our findings on the surveillance and a consolidated summary of better and poorer practices and actions in November. We will also provide a set of guiding disclosure and conduct principles outlining how private credit can be done well.

Where ASIC regulatory guidance already exists, as part of our wider simplification work in 2026 we will review and clarify areas that require a refresh. We are presently collecting the responses to our consultation paper on conflicts management guidance. Our proposed updated Regulatory Guide 181 (25-150MR) contains new examples related to private market practices. We expect to complete this update by the end of 2025.

Industry can act early to lift standards

In response to the discussion paper, the private credit industry has shown a willingness to engage with ASIC and implement more consistent standards and practices across the industry.

ASIC encourages industry bodies to use the findings in REP 814 as an opportunity to review local and international standards and approaches, and to proactively enhance Australian industry standards in the private credit sector. Indeed, many existing standards offer valuable guidance in addressing the concerns outlined in the report.

ASIC’s work to support thriving public markets

ASIC will continue to support the health and future of Australia’s public markets. Responses to the discussion paper have underscored the importance of public markets – and confirmed that although Australia has strong regulatory and governance frameworks that are relatively attractive to companies and investors, there are areas for improvement.

We heard that certain disclosure, governance and other regulatory settings for listed public companies are impacting the appeal of listing or remaining listed in Australia, and we received a range of ideas for change. ASIC is prioritising the ideas that are within our remit and will have the greatest short-term impact.

While we do not see regulatory settings as the dominant factor driving listing decisions in Australia, we have already made adjustments to improve the attractiveness of Australia’s listed equities markets.

These include changes to the IPO process (25-096MR), allowing for earlier engagement with issuers to streamline the review process, moves to foster competition and create more opportunities for companies and investors (25-154MR) and an Inquiry into Australian Securities Exchange (ASX) group (25-103MR), focusing on governance, capability, and risk management frameworks and practices.

We are also considering ideas regarding pre-prospectus advertising, prospectus length, trading plans and sell-side research. Some policy-related ideas extend beyond ASIC’s remit or powers in relation to governance, disclosure and listing requirements. We are also liaising with peer agencies and market operators on other ideas – including reviewing listing rules – and will provide a further update in November.

What’s next, and our future plan

In November, we will release findings from ASIC’s private credit surveillance across retail and wholesale funds. Building on REP 814, this release will include two additional expert reports, along with our responses to the surveillance findings, expert insights and stakeholder feedback.

We will outline guidance principles for compliant private credit and provide a forward-looking roadmap that includes industry standards and future surveillance activity.

Summary of what we will issue in November:

Background

• 25-209MR ASIC signals opportunity for industry to lift private credit standards (22 September 2025)
• Report 814 Private Credit in Australia
• Discussion paper Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets
• 25-021MR Advancing Australia’s regulatory roadmap for public and private capital markets (26 February 2025)
• 25-094MR The future of Australia’s public and private markets – ASIC shares industry feedback and next steps (4 June 2025)