Super’s influence laid bare in regulator’s findings

Australia’s superannuation system is exerting increasing influence over capital markets, with industry feedback to ASIC underscoring its role in reshaping investment flows, governance expectations and market dynamics.

In submissions to the corporate regulator, stakeholders described the superannuation sector as a “mature and significant force” exerting a “structural influence on markets and investment”, ASIC said on Wednesday, as it released 50 responses to its public markets consultation paper published in February.

Feedback – which came from the likes of the FSC, ASX, IFM, and individual funds and stakeholders – acknowledged that the growth of compulsory retirement savings has not only boosted private market allocations but also changed how institutional capital engages with both public and private markets.

The feedback comes as ASIC investigates whether superannuation’s growing influence is entrenching private markets within the economy, and whether changes in public capital raising and market participation are structural or merely cyclical.

“Industry feedback was mixed on whether the decline in initial public offerings (IPOs) and listed companies was structural or cyclical, with most accepting some structural elements,” ASIC said.

Many companies, according to the feedback, are opting to stay private or delist to pursue longer-term growth away from the pressures of public market reporting, the regulator acknowledged.

Overall, ASIC said private markets were broadly recognised as “a significant and structural global trend”, with stakeholders emphasising the unique investment opportunities they offer beyond those available in public markets.

ASIC further highlighted that while many respondents argued that private markets are broadly serving institutional investors well under the current legal framework, there were calls for tighter oversight in areas such as asset valuation, conflicts management, disclosure of fees and risks, and equitable treatment of investor types – alongside suggestions for ASIC to ensure any regulatory guidance is measured.

“Overall, respondents said the regulatory framework is generally sound, however there is scope for some targeted uplift and for more active and ongoing monitoring and supervision in wholesale and retail private markets,” the regulator said.

Interestingly, ASIC also acknowledged feedback that suggested it had underestimated the size of private markets in Australia, with strong consensus that regulators need to be well informed about Australia’s markets to do their job effectively.

Feedback also revealed that concerns are mounting over growing retail exposure – particularly in fast-growing areas like private credit – amid opacity, potential conflicts of interest and limited liquidity.

“There is scope for some targeted uplift and more active ongoing monitoring and supervision,” ASIC said, particularly where private offerings increasingly target “less sophisticated wholesale investors” or retail investors.

On public markets more specifically, stakeholders reiterated their “critical role” in capital raising and price discovery. But many said the appeal of listing needs a reset.

Suggestions included streamlining IPO processes, reviewing free float rules and simplifying governance obligations – especially for smaller firms.

“Feedback received offers a range of ideas to adjust regulatory settings and to enhance the appeal of public markets for companies and directors,” ASIC said, adding that some of these proposals fall under its remit, while others require cross-government coordination.

Importantly, super funds were flagged as playing a dual role – not just as major allocators to private assets but also as intermediaries for retail exposure.

Respondents called for improved transparency around investment strategies and portfolio composition, particularly in private markets. At the same time, they acknowledged the super sector’s influence on “governance, disclosure and conduct practices”.

ASIC confirmed it will continue working with APRA and the industry to assess disclosures, including those made to fund members.

Private credit good if ‘done well’

The private credit sector, in particular, drew attention, with stakeholders acknowledging its economic value, “if done well”.

The overwhelming message received by ASIC was that “private credit is good for the economy and investors”, but work needs to be done to ensure it is sustainably done well.

“Respondents outlined the growing availability of private capital has met a real need, and if done well, private credit is good for both sides of the economic equation – investors and borrowers - and can complement the banking system,” ASIC said.

“However, there were calls for increased supervision of the Australian private credit market due to its opacity, rapid growth, and untested status in a downturn,” it added.

Of particular concern was increasing exposure of retail investors to private credit markets, with respondents calling for closer examination following concerns for potential non-investment risk-driven losses.

ASIC noted a growing willingness from the private credit industry to engage with the regulator on potential guidance and improved standardisation – marking a shift from earlier perceptions that private credit providers were reluctant to engage.

Moving forward, ASIC said its ongoing surveillance of private credit in wholesale and retail markets will be informed by expert insights.

Next steps

While no sweeping reforms have been outlined yet, the direction is clear: ASIC is considering measured changes to support both market integrity and investor confidence across the spectrum.

In a statement on Wednesday, ASIC Chair Joe Longo said the agency was closely considering the submissions to inform its next steps.

"ASIC wants both public and private markets to thrive and flourish – together, they drive more investment, more opportunities for companies to grow, and more jobs for Australians," Longo said.

"I was encouraged by the breadth and richness of the responses we received, which recognised this is a timely discussion that will shape the future of Australia’s capital markets. We heard our markets are strong but changing, and that public and private markets must complement, not cannibalise each other."

Longo assured all stakeholders that "ASIC is listening", highlighting streamlining IPOs and disclosure requirements as "actionable ideas".

"We will carefully consider the requests for urgency to improve the attractiveness of Australia’s public markets, as well as the caution expressed in submissions to move carefully in adjusting any settings in private markets," he said.

"We look forward to announcing the adoption of some of the proposed actionable ideas and will share our roadmaps for public and private markets in Q3 and Q4, respectively, this year."