ASIC’s tech approach to regulation heightens as digital disclosure introduced


The Australian Financial Services Commission (ASIC) today announced a joint industry project to develop innovative, digital financial product disclosure that aims to boost investors’ understanding of financial products as the latest instalment in the Antipodean regulatory authority’s drive toward embracing highly technological methods of operating its procedure.

ASIC has become well recognized in the FX industry as being a very prudent regulator as well as an authority which maintains a clear understanding of the modern financial landscape, having adapted its procedures and systems in line with widespread electronic trading, set forth a set of rules for high frequency trading and algorithm usage, as well as employed real time surveillance systems from First Derivatives alongside its own proprietary SMARTS system.

These factors are not only a boon for FX companies operating in Australia as the regulator is completely geared up to work with them and does not retain any legacy operations, but also are important to the investing public who rely on a regulator which understands the digital age and rapidly evolving electronic trading business.

As far as the introduction of digital disclosure is concerned, ASIC considers it to be part of the regulator’s broader work in promoting digitisation and new media to help engage investors.

ASIC will work with product providers AMP and Vanguard to develop and user-test a short, online ‘key facts’ sheet and a self-assessment tool to guide investor understanding.

ASIC Chairman Greg Medcraft said technology was integral to improving the effectiveness of disclosure “We want investors to have trust and confidence in our financial system and part of that is for ASIC to explore new ways for investors to get to grips with their investments” Mr Medcraft said.

“We encourage industry to harness the opportunities of digitisation. More and more, people are accessing financial products and making decisions using mobile devices.”

“More work needs to be done on short disclosure. Investors tend to turn off when faced with wordy disclosure documents. If they need more detail, investors can access further layers of information from product providers online” concluded Mr. Medcalf.

With preliminary results expected by mid 2015, product providers could also present information in interactive or video form and offer online tools for investors to assess their understanding of a product.

Mr Medcraft concluded “ASIC acknowledges AMP and Vanguard in taking this first step. We will use the findings from the project to inform our broader work on digital disclosure.”

ASIC’s position on this differs somewhat from that of the US Commodity Futures Trading Commission (CFTC), which presides over significantly more electronic trading firms in North America, clearly the most technologically advanced region in the world when it comes to financial services systems. Recently, LeapRate reported that CFTC Chairman Timothy Massad made his concerns known that the CFTC does not have budget to develop its systems and procedures to align itself with the ultra-modern systems used in today’s financial markets sector.

This project complements ASIC’s recently announced proposals to further promote digital disclosure, with the full announcement being available here.

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ASIC's tech approach to regulation heightens as digital disclosure introduced

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