The ASIC is stepping up its call for enhanced oversight of business communications among authorised representatives.
According to MCO, with Australian financial markets being integral to both working and retired Australians through various investment avenues such as Superannuation, the security and integrity of these markets cannot be overstated.
Financial firms hold a critical role in safeguarding the health of Australia’s financial markets. Given the vast participation in these markets, firms must ensure diligent monitoring and management of market activities. Misuse of information, market manipulation, or unethical behaviour by those within the market could have extensive repercussions on its integrity.
In response to the evolving landscape of communication technologies, ASIC has placed a significant emphasis on managing conduct risk and maintaining compliance with the Corporations Act 2001 and ASIC’s market integrity rules. The new guidance provided in ASIC’s Information Sheet 283 outlines how firms can mitigate risks associated with unmonitored and encrypted communication channels.
Over the past decade, the methods of communication have undergone substantial changes. According to the 2024 Surveillance Benchmarking Report by 1LoD and co-sponsored by MyComplianceOffice (MCO), a majority of firms are now monitoring a wide array of electronic communication channels ranging from emails to social media platforms like WhatsApp and WeChat.
ASIC’s Information Sheet 283 serves as a crucial resource for entities like investment banks and corporate advisers. It helps them understand their obligations and the importance of addressing risks proactively. The regulator has highlighted the potential risks of misconduct from the use of unmonitored and encrypted channels in business communications.
ASIC has also reminded intermediaries operating under an Australian Financial Services (AFS) licence about their responsibilities. These include taking reasonable steps to ensure compliance with financial laws and implementing adequate risk management systems.
Since 2016, ASIC has observed the effectiveness of substantial remediation programs aimed at enhancing the monitoring and supervision capabilities of market intermediaries. With RegTech systems, many firms are now better equipped to handle the complexities of monitoring communications, thereby actively reducing their risk of misconduct.
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