ASIC slated for greater super fund involvement

Market-based financing may see regulators such as the Australian Securities and Investments Commission (ASIC) play a greater role with regards to superannuation funds.

ASIC chairman Greg Medcraft, speaking at a function in New York in his role as chairman of the International Organisation of Securities Commissions, pointed to structural changes driving market-based financing as creating a need for greater regulatory oversight.

He said increased banking regulation and the growth of the pension and superannuation sectors were propelling the structural change.

"New rules to strengthen the banking system are imposing higher capital and liquidity requirements," he said.

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"The net effect of this is often a decreased access to debt capital and an increased cost to business.

"As a result, many businesses are turning to market-based financing to source their capital."

Medcraft cited the continuing global growth of the pension and superannuation sectors — much of which is invested in debt and equity capital markets — as another driver.

"A good example of the growth in super is in Australia, where funds in superannuation are expected to grow from $1.4 trillion to $3 trillion by the end of the decade," he said.

Medcraft said the growing importance of market-based financing presented a challenge for market regulators to make sure they had the right tools and resources to ensure debt and equity capital markets could perform their role in funding economic growth.