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MIU - Issue 177 - June 2026

Issue 177 of the Market Integrity Update covers regulatory developments and issues affecting markets.

Private credit sector on notice, ahead of 30 June valuations and reporting

Australia’s private credit sector is on notice. ASIC is calling on all private credit industry participants to ensure their 30 June asset valuations are current, accurate and grounded in realistic assumptions.

ASIC also expects boards, auditors and all participants across the private credit eco-system, including responsible entities, trustees and chief investment officers, to assess their practices against ASIC's ten principles and lift standards where needed.

The sector is entering its first meaningful test, with tighter liquidity, emerging borrower stress and signs of credit deterioration testing valuations, governance and investor disclosures.

Early insights from ASIC’s private credit work indicate the market is moving from a period of rapid growth into a more demanding phase, with persistent macroeconomic pressure and a slow creep in credit stress indicators.

Retail investor and superannuation exposure is increasing, and recent isolated incidents have highlighted how Australian retail investors can be exposed to offshore redemption constraints and liquidity pressures through local feeder funds. There are inherent linkages between the international and domestic markets as with all global financial markets.

When done well, private credit provides an important source of funding and supports economic growth and innovation. But weaknesses in governance, disclosure, valuation practices and conflicts management become more pronounced as conditions tighten.

ASIC is probing these and other issues across the sector. Active surveillances across wholesale and retail funds are well progressed and multiple enforcement investigations are underway. ASIC continues to engage with industry bodies on stronger standards across retail and wholesale funds and review financial reports and audit files for private companies and superannuation funds.

These obligations cannot be outsourced. Participants must ensure that all those in their funds management value chain—from origination through to audit—are meeting their responsibilities to support participants’ obligations.

ASIC’s message is straightforward: participants should use this reporting cycle to challenge assumptions, refresh valuations, and lift practices in line with ASIC’s ten principles.

Read the insights from ASIC’s survey, ongoing surveillance and industry engagement (news item).

Act now to strengthen cyber resilience as AI accelerates cyber threats

ASIC is calling on all licensees and market participants to urgently strengthen their cyber resilience measures, as frontier artificial intelligence (AI) intensifies the global cyber risk environment.

In an open letter to industry (26-092MR) ASIC has urged entities to act now and not wait for advanced AI tools to uplift their cyber security fundamentals and ensure their systems can withstand AI-accelerated threats.

Clients entrust licensees with sensitive and confidential information, and that trust carries clear responsibilities. ASIC expects licensees to be on the front foot to ensure their customers and clients aren’t put at risk by inadequate controls.

ASIC Commissioner Simone Constant said, ‘In this new world, weaknesses that once seemed isolated can now have a system-wide domino-effect, enabling new forms of exploitation that were previously out of reach for most malicious actors.’

Entities are required to table ASIC’s letter at their board and risk governance committees.

The message follows ASIC’s recent court outcome against FIIG Securities Limited (26-021MR), which reinforced the legal case for cyber risk management controls to be demonstrably effective and proportionate to the size, nature and complexity of a business.

What this means for you

Entities need to have robust incident response plans. Whether facing a basic phishing attempt or a more sophisticated cyber attack, the underlying cyber risk management principles of govern, protect, detect, respond remain the same.

ASIC is urging entities to take the following steps now:

  • reassess your cyber plans and refocus efforts on the most critical risks in today’s threat environment
  • confirm your cyber risk, governance and overall risk and decision-making frameworks to consider the cumulative impact of interrelated vulnerabilities and facilitate clear decision making and escalation at the pace necessary to manage risk
  • identify and protect critical assets and systems, with a clear understanding of what matters most to your business and customers
  • strengthen cyber security fundamentals by regularly reviewing and validating core controls
  • minimise attack surfaces by reducing exposure of systems and services to untrusted networks
  • regularly review user access and reassess privileges to protect against unauthorised access. Insider threats are increasing and entities should monitor for warning signs and act to restrict access where concerns are identified
  • patch systems promptly, recognising that AI is accelerating vulnerability discovery and exploitation
  • review and strengthen patch management processes, considering challenges daily patching may present to identification, testing, and governance of critical updates
  • implement layered, defence-in-depth architectures that assume breach and restrict lateral movement
  • prepare for incident response by maintaining and exercising incident response plans and playbooks including business continuity plans and identification of highest priority services, channels and platforms
  • actively manage third-party risks, particularly where services introduce concentration or systemic exposure, and
  • use AI for defensive purposes, where appropriate, including identifying vulnerabilities and securing software before release.

Entities should use practical guidance from trusted sources, including the Australian Signals Directorate, and the Australian Government’s free and anonymous Cyber Health Check, which provides a tailored action plan with simple, actionable steps to improve cyber security.

ASIC will continue to work closely with other regulators, agencies and industry to monitor cyber risks and promote consistent expectations across the financial system.

ASIC extends no-action relief for digital asset businesses

ASIC has extended its no‑action position for digital asset businesses by three months, to 30 September 2026.

This provides additional time for firms to apply for, or vary, an Australian Financial Services (AFS) licence. Firms requiring an Australian market licence or clearing and settlement (CS) facility licence must continue to meet all existing requirements, including notifying ASIC of their intention to apply and holding a pre‑meeting with ASIC, with the deadline now aligned to 30 September 2026.

ASIC has also broadened the scope of the no‑action position for AFS licensing to cover certain authorised representative and intermediary authorisation arrangements.

The extension and broader scope support an orderly path to licensing, while maintaining a focus on investor protection and market integrity.

ASIC’s updated class no-action letter for digital asset businesses outlines the full scope and conditions of its extended no-action position.

Digital asset businesses transitioning to the new licensing regime can contact ASIC at fintech@asic.gov.au.

EOFY ‘window dressing’: Look out for unusual trading

As the end of financial year (EOFY) approaches, market participants should remain alert to unusual trading activity that may affect the price of shares or other assets and EOFY performance figures. This activity is known as ‘window dressing’.

Window dressing is a form of market manipulation where parties with a financial incentive influence asset prices around key reporting dates.

This may occur where directors, large shareholders and fund managers who periodically report to clients seek to influence reported performance.

Market participants should take active steps to identify potential misconduct through system controls and pre-trade filters, as well as through real-time and post-trade reviews of any abnormal trading behaviour.

Suspicious or identified window dressing must be reported to ASIC through the ASIC Regulatory Portal or by emailing markets@asic.gov.au.

Further information is available on ASIC's report suspicious activity webpage.

ASIC will continue to monitor unusual price movements that may indicate market manipulation and may contact entities for an explanation where reporting obligations appear unmet.

For more information about suspicious activity reports, please see:

  • Regulatory Guide 265: Guidance on ASIC market integrity rules for participants of securities markets (RG 265), and
  • Regulatory Guide 266: Guidance on ASIC market integrity rules for participants of futures markets (RG 266).

Provide feedback on proposed pre-hedging guidance

ASIC is seeking feedback on a proposed, new pre‑hedging regulatory guide, with submissions open until 27 July 2026.

Consultation Paper 389 Proposed regulatory guide on pre‑hedging (CP 389) outlines ASIC’s expectations for market participants engaging in pre-hedging and how existing legal obligations apply. It does not introduce new legal requirements.

The proposed guidance aligns Australia’s regulatory approach with international standards developed by the International Organization of Securities Commission (IOSCO).

The guidance is relevant to market participants, including Australian financial services licensees and other entities that undertake pre‑hedging in anticipation of client transactions. It also provides guidance on conduct that clients should expect of these entities.

ASIC is seeking feedback on the proposals in CP 389, and whether the final regulatory guide should include examples of observed better practices to support implementation.

ASIC intends to publish the new regulatory guide in Q4 2026, after considering consultation process feedback.

Providing feedback

Submissions for feedback close at 5pm AEST on 27 July 2026 and will remain open for six weeks. Details on how to respond are set out in the consultation paper.

You can read the supporting announcement on ASIC’s website.

Strengthening the fight against imposter scams in financial services

ASIC is now publishing Australian financial services (AFS) licensee website addresses on the Professional Registers Search (PRS) to help consumers and businesses identify legitimate providers and avoid scams.

As more AFS licensee website addresses are added to the PRS, it will become easier for Australians to check whether they are dealing with a legitimate AFS licensee website.

Users can search the PRS using an AFS licensee’s name, ABN, ACN or AFSL number, then check the ‘Principal website’ field and ‘Websites’ section to confirm a website address is genuine before investing or using financial services.

AFS licensees that have not yet provided their website details, can do so through the Regulatory Portal by submitting a ‘Notify change of details of an Australian financial services licence’ transaction. If an AFS licensee does not operate a website, this should also be confirmed through the portal.

ASIC recognises the importance of having a complete register for businesses and consumers. ASIC may consider using compulsory powers to achieve a complete register, if required.

For more information and FAQs, see AFS licensees: Providing and updating website addresses through the Regulatory Portal.

The supporting media release can be found on the ASIC Newsroom.

Ensure compliance with pre-negotiated business orders on Futures Markets

ASIC is warning market participants against misuse of pre-negotiated trading, having recently observed activity that does not align with requirements.

Pre‑negotiated trading involves orders arranged off‑market before being exposed and executed on the exchange.

This form of trading is only permitted in limited and specific circumstances, as set out under Rule 3.3.1A(1) of the ASIC Market Integrity Rules (Futures Market) 2017 (Rules).

These requirements support market integrity, transparent price discovery, and ensure fair and equal access to the market – particularly in thinly traded contracts, where pre-negotiated trading is more prevalent.

ASIC has identified recent non-compliance in electricity futures contracts, where:

  • a market participant placed opposing orders following a Request for Quote (RFQ), with execution occurring just six seconds after RFQ publication—falling short of the required 30-second interval, and
  • a market participant permitted a client with direct market access to enter pre-negotiated orders without first submitting the required RFQ prior to entry and execution.

ASIC has issued a non-compliance warning in relation to these matters.

Market participants are reminded of their obligations when engaging in pre-negotiated business orders on the ASX24 Markets.

Participants must take all necessary steps to ensure compliance with the Rules, implementing and maintaining effective arrangements, systems and controls to:

  • ensure RFQ requirements and timing intervals are strictly adhered to
  • prevent the inappropriate use of pre-negotiated trading, and
  • appropriately supervise client activity, including heightened oversight of direct market access arrangements.

Market participants act as gatekeepers and must maintain robust frameworks to detect, disrupt and address conduct that may undermine market integrity.

ASIC is actively monitoring pre-negotiated trading and will take action, where appropriate.

ASIC moves to bring Euroclear under Australian licensing regime, strengthening market resilience

In late May, ASIC exercised new powers to declare that Euroclear Bank SA/NV (Euroclear) has a material connection to Australia, triggering requirements to transition to Australia’s licensing regime.

This follows an assessment of Euroclear’s Australian operations and consultation with the Reserve Bank of Australia (RBA), using expanded powers introduced under the financial market infrastructure (FMI) reforms (24-208MR).

Applying these powers ensures that offshore providers with a material connection to Australia are subject to appropriate regulatory oversight, supporting the resilience and integrity of Australia’s financial markets.

ASIC expects Euroclear to lodge a CS facility licence application within 12 months, by 26 May 2027.

To avoid any disruption, ASIC has granted Euroclear a temporary exemption while a licence application is progressed.

Euroclear has indicated it will engage constructively with ASIC during this process.

ASIC’s approach is consistent with its commitment to promote confident and informed participation in fair and effective markets, supporting economic growth in Australia.

As a significant global economy, Australia needs sophisticated and resilient market infrastructure providers and participants.

New IOSCO reports outline key developments in market liquidity and extended trading hours

IOSCO has recently published a consultation report on market liquidity during the trading day and a report on extended trading hours.

Market participants should consider how the developments may affect trading behaviour, liquidity conditions and risk management frameworks.

The international body is seeking feedback on its consultation report. To submit your comments and/or questions to IOSCO for consultation, please follow the instructions within the foreword of the report.

IOSCO's Consultation Report on the Evolution of Market Liquidity during the Trading Day examines how liquidity is distributed throughout the trading day and the implications of evolving liquidity patterns. It highlights a growing concentration of trading activities at the close and auction designs, and the effectiveness of existing regulatory and supervisory approaches.

While deeper closing auctions may support price discovery and efficiency, IOSCO notes potential risks including:

  • reduced liquidity during continuous trading
  • increased susceptibility to market manipulation
  • heightened volatility around the close, and
  • operational and resilience challenges for trading venues.

Based on this analysis, IOSCO is proposing a set of good practices to help regulators and trading venues respond to evolving liquidity patterns and preserve the benefits of efficient and orderly markets.

Through this consultation, IOSCO is seeking stakeholder feedback on these proposed good practices, with a view to informing potential future work in this area.

The Extended Trading Hours report on the other hand, reviews global proposals and practices related to extended, overnight and near-continuous trading hours, and examines the potential benefits and risks for equity markets across IOSCO jurisdictions.

Enforcement outcomes

Over the last two months, the following enforcement outcomes were recorded:

  • ASIC successful in High Court Block Earner appeal (26-124MR)
  • ASX admits misleading conduct relating to CHESS replacement project (26-119MR)
  • Fund manager Rodney Forrest re-sentenced to five years and three months’ jail following insider trading appeal (26-104MR)
  • CDPP discontinues insider trading charges against Big Un former CFO Andrew Corner following hung jury (26-108MR), and
  • ASIC appeals Federal Court decision dismissing case against Nuix (26-103MR)