ASIC is seeking feedback on a proposed, new pre‑hedging regulatory guide, aligning Australia’s regulatory approach with international standards developed by the International Organization of Securities Commission (IOSCO).
Released today, Consultation Paper 389 Proposed regulatory guide on pre‑hedging (CP 389), provides draft guidance outlining ASIC’s expectations for market participants engaging in pre-hedging and how existing legal obligations apply to the practice.
ASIC played a key role in shaping IOSCO’s global approach as Chair of IOSCO’s Committee on Regulation of Market Intermediaries.
The proposed regulatory guide aligns with IOSCO’s Final Report on Pre-Hedging and builds on ASIC’s previous communications to industry (ASIC’s guidance for market intermediaries on pre-hedging). It does not introduce new legal requirements.
The draft regulatory guide aims to:
- clarify how existing obligations apply to pre‑hedging activities
- help market participants assess when pre-hedging is appropriate, and
- highlight practices that help manage conduct risk and maintain market integrity.
The guidance is relevant to market participants, including Australian financial services (AFS) 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 industry feedback on the proposals in CP 389, including 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.
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Background
Pre‑hedging is used by market participants to manage risks associated with anticipated primary capital raisings and secondary market transactions. While it can support liquidity and efficient execution, pre-hedging can raise conflicts of interest and risks of market abuse where market participants trade while in possession of confidential information about an anticipated client transaction.
Market participants should always carefully consider their obligations under Australian law and applicable international codes and standards, when undertaking pre-hedging.
On 1 February 2024, ASIC published an open letter to market participant CEOs outlining its guidance on pre-hedging practices in Australia (ASIC’s guidance for market intermediaries on pre-hedging). The proposed regulatory guide will supersede this letter once finalised.
IOSCO’s Final Report on Pre-Hedging, published in November 2025, introduced a global definition of pre‑hedging and recommendations for regulators to address conduct and risks arising from pre-hedging.
ASIC has previously taken enforcement action against several entities for poor practises or misconduct related to pre-hedging.
- In December 2025, Australia and New Zealand Banking Group Limited (ANZ) was ordered to pay $135 million in combined penalties for misconduct relating to a $14 billion government bond transaction, including a record $80 million penalty for unconscionable conduct. This outcome was part of a total $250 million in penalties ordered against ANZ across four, separate court proceedings (25-314MR).
- In January 2024, Westpac Banking Corporation (Westpac) was found to have engaged in unconscionable conduct when executing a $12 billion interest rate swap transaction and was ordered to pay $1.8 million in relation to the conduct and $8 million for ASIC’s litigation and investigation costs, with penalties and costs totalling $9.9 million (24-011MR).
ASIC is Australia’s corporate, markets and financial services regulator.