11-77MR ASIC releases further consultation paper on disclosure by infrastructure entities
Friday 8 April 2011
ASIC today released a further consultation paper on proposed improvements in disclosure that will apply to infrastructure entities,1 with the aim of improving the quality of information available to retail investors. ASIC has also released with the consultation paper a draft regulatory guide.
The consultation paper (CP) and draft regulatory guide (RG) released today – CP 154 Infrastructure entities: improving disclosure to retail investors – further consultation (CP 154), and draft RG Infrastructure entities: improving disclosure for retail investors – follow consultation that began in April last year with CP 134 (see 10-81 AD). CP 134 proposed benchmarks and additional disclosure that would apply to infrastructure entities.
ASIC released CP 134 in response to the significant capital losses suffered by investors through investing in infrastructure entities. ASIC continues to believe that improved disclosure in this sector is warranted given that there is a significant amount of public investment in infrastructure anticipated over the next decade, which makes improving disclosure for infrastructure entities especially important.
ASIC Commissioner Greg Medcraft said ASIC's decision to release a further consultation paper recognised the growing importance of retail infrastructure investments in Australia. 'ASIC seeks to ensure it arrives at a framework that takes into account the views of participants with an interest in the sector, and which will also bring better outcomes for retail investors who want to understand what they are investing in and the associated risks.'
The CP that is released today (CP 154) seeks to clarify a small number of remaining issues from the earlier consultation, and sets out in detail ASIC's proposed benchmarks and disclosure principles, taking into account responses to the earlier consultation. In particular, ASIC has provided two options for the definition of an infrastructure entity, and asks respondents to provide feedback on them including their preferred option. The draft regulatory guide provides a benchmark approach to improved disclosure for this sector. This approach is consistent with other proposed regulatory guidance e.g. CP 147 Hedge funds: Improving disclosure for retail investors and CP 141 Mortgage schemes: Strengthening the disclosure benchmarks.
Responses close on 6 May 2011. ASIC proposes to release a final RG in the third quarter of 2011.
ASIC will also produce a companion investor guide to help investors in infrastructure entities better understand the information provided by infrastructure entities.