Continuous Disclosure: Has Regulation Enhanced the Australian Securities Market?
journal contributionposted on 29.10.2019 by Entcho Raykovski
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In order to ensure that the Australian securities market produces the optimal amount of timely information, mandatory continuous disclosure is essential. Whilst the market arguably produces a sufSlcient amount of information on its own, the evidence on irrationality of investors, the public good characteristic!i of information and the incentives for managers to withhold 'bad' news all suggest otherwise. It is for these reasons that Australia has adopted a framework of continuous disclosure via the Corporations Act 2001 (Cth) and the Listing Rules of the Australian Stock Exchange. Historically, the framework of enforcement under the two regimes had fallen short of what is required to ensure that the full range of breaches can be rectified by adequate sanctions. The CLERP 9 reforms have sought to resolve this problem by increasing the range of remedies available under the Corporations Act 2001 (Cth). The ASX has also attempted to widen its power and to ensure compliance with its Listing Rules through the lfalse markets' requirement, which came into force on I January 2003. Unfortunately, the requirement has little, if any, residual operation over and above the rules already in place prior to that date. It is proposed that widening the range of actions available to the ASX would be preferable to the existence of the lfalse markets' rule. Additionally, the ASX needs to address the problems associated with the perceptions of a conjict between its commercial and regulatory functions. The best way to eliminate such perceptions would ihvolve the continual external supervision of its activities and the adoption of a policy to provide reasons for its decisions, even though it may not be required to provide these by law. This will guarantee transparency in its operations and will maintain the integrity of the market.