Market update on confidential information and rumours

ASIC yesterday announced¹ it will continue working closely with the market over the next six-to-nine months to improve industry standards on the responsible handling of rumours and corporations’ management of confidential information but will not issue regulatory guidance on either subject at this stage.

In the second half of 2009, ASIC issued:

• Consultation Paper 118 Responsible handling of rumours – setting out principles to assist market participants when handling rumours (CP 118), and
• Consultation Paper 128 Handling confidential information – to help improve market practices on listed entities' handling of confidential information (CP 128).

ASIC noted that responses to the Consultation Papers raised a variety of issues.

In response to issues concerning CP 118, ASIC proposes to monitor the market and work further with industry over the next six to nine months to understand its concerns and how these principles on rumours might be adopted in practice before making a decision about whether and what further regulatory action may be needed.

In the meantime, ASIC remains of the view that, at a minimum and in line with practices in the major overseas capital markets, AFS licensees who are actively involved in the market should consider:

• having in place written procedures which provide clear guidance for operational areas involved in the market about how to deal with rumours
• training employees in the relevant areas about these procedures, and 
• monitoring compliance with these procedures and being able to demonstrate compliance with the procedures.

In response to issues concerning CP 128, ASIC noted that the submissions it received welcomed guidance in the area, but had specific comments or suggestions on particular situations. ASIC’s goal is for the guidelines to be widely adopted and applied as broadly as possible, so ASIC intends to work with industry bodies so they might finalise this important guidance on behalf of their members. ASIC will do this over the next six-to-nine months.

Endnotes

1. ASIC Media Release, ‘10-99AD Market update on confidential information and rumours’

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