This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead - all in two minutes or less.
In this Edition, we consider the Government’s expectations of ASIC improvements, IOSCO’s retail investor complaint practices and ASIC’s consultation on relief for companies in external administration. We also look ahead to the impacts of the recent short squeeze rort and WA’s lockdown.
GOVERNANCE & REGULATION
Treasurer shares outcomes of review of ASIC Governance. media release
IOSCO issues Sound Practices to protect retail investors and assist members in enhancing complaint handling. Complaint Handling and Redress System for Retail Investors media release
LEGAL
ASIC consults on financial reporting and AGM deferral relief for companies in external administration. media release
OVER THE HORIZON
The ripple effect of a short squeeze. Before last Friday, the tactic of short-selling was of little interest to the layman and retail investors frequently found themselves on the wrong side of the trade. All that changed with the short squeeze on US retailer GameStop orchestrated by an army of “Redditors” - users of the social media platform Reddit, which has already claimed one high-profile Wall Street scalp, and may claim others given losses in such situations are theoretically uncapped. Of course, when the “wall” of buying vanishes, as it inevitably must, the losses to retail investors will also be substantial. There are likely to be ripple effects from the recent activity in markets as diverse as commodities (a short squeeze is under way in the silver market at the time of writing) and cryptocurrency (as investors shift their activity to decentralised finance (so-called DeFi) markets and boycott brokers who restrict retail trading activity). Directors of listed companies will need to be alert to the potential distortions in market value that may eventuate from co-ordinated (and often unsophisticated) trading activity by retail investors - a phenomenon that seems likely to gather pace. We expect ASIC to keep a close eye on this trend and potentially to revisit regulatory settings for information and trading platforms in the medium term.
WA lockdown uncertainty. Today starts a 5-day lockdown for parts of Western Australia following a positive COVID-19 test result from a hotel quarantine security guard in Perth. The short notice on lockdown and travel bans throughout the state caused short term confusion with respect to fly-in, fly-out arrangements for most workers in the state’s mining sector (who have overnight been deemed “essential workers” and hence able to avoid lockdown requirements). The extent of community transmission should become evident in the next 48 hours or so and will dictate any tightened or extended lockdown arrangements.