In its latest market cleanliness report, the financial watchdog emphasised that sound – or clean – financial markets are essential to the economy and empower companies to raise funds, navigate risks and boost investor confidence. The regulator’s chairperson, Joe Longo, stated:

Protecting and enhancing the integrity of Australia’s equity markets continues to be a priority focus for ASIC.

According to ASIC’s press release, share price increases before releasing tangible information are a red flag. It also stated that any trading beforehand “may indicate some parties are profiting unfairly” from data that is not yet in the public domain.

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The Equity Market Cleanliness Snapshot Report covers the five years up to 30 April 2024. During this time, there were reportedly “two periods of temporary deterioration”. The COVID-19 pandemic impacted the volatility and trading of markets worldwide and corporate activity spiked at the end of 2023.

ASIC maintained that it had acted swiftly in both instances to prevent financial harm. It added:

Our regulatory interventions to address the deteriorations included targeting pump and dump activity, intervening on chat rooms, reviewing ‘finfluencer’ activity and undertaking targeted reviews where we observed leaks ahead of market announcements.

Based on the regulator’s publication, it combines real-time trade monitoring data, top-shelf analytical tools, and human proficiency to identify irregularities. ASIC also plans to establish a “dedicated criminal investigation team” that expedites investigations into insider trading and escalates the “number of criminal briefs” referred to the Commonwealth Director of Public Prosecutions.

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