Welcome to Edition 54 of Boardroom Brief.
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.
KEY BOARDROOM BRIEF
ASX publishes updated listing rule guidance. On 9 March 2018, the ASX released updated listing rule guidance for Guidance Note 1 (Applying for Admission), Guidance Note 8 (Continuous Disclosure), Guidance Note 12 (Significant Changes to Activities) and Guidance Note 16 (Trading Halts and Voluntary Suspensions). With respect to GN 8, Directors should note: (i) ASX’s additional disclosure requirements for market sensitive acquisitions and disposals, and material contracts (section 4.15); (iii) the reflection of the new insolvent trading safe harbour for directors under the Corporations Act and what should be disclosed when an entity in financial difficulty requests a voluntary suspension to complete a transaction necessary for its survival (section 5.10); and (iv) ASX’s clarification of aspects of Example D (relating to reporting mineral discovery) in Annexure A to GN 8. Also of note is the update to GN 1 to extend the good fame and character requirements to individuals who, whilst not directors, have considerable influence in the entity.
ASIC publishes market integrity report. ASIC has released its latest report on market integrity for the period 1 July to 31 December 2017. Report 569 Market integrity report: July to December 2017 (REP 569) looks at ASIC’s focus on cyber resilience, client money and sell-side research. It also looks at some of ASIC’s key activities over the last six months in areas such as financial benchmarks, continuous disclosure and binary options. Ongoing priorities and areas of focus for ASIC’s market integrity work in 2018 include technology and cyber resilience, conduct and effective capital markets. See ASIC’s media release. Directors need to be aware that the issue of cyber-resilience will be a hot-point for regulators in 2018. It is not just a technology issue, but a question of developing a compliance culture, which always starts at the top. Directors should ensure that discussion and testing of cyber-resilience is a routine part of the Board’s agenda.
Higher market volatility predicted for 2018. Whilst markets have calmed after a turbulent February, analysts have pointed to a few slow-burning issues impacting the global markets; namely, the escalation of trade tensions (U.S. President Donald Trump’s administration a continuous source of uncertainty), the rise of populism and political risk more generally (The Five Star Movement’s win in Italy being the latest case), and ongoing Brexit negotiations (to come to the forefront as Brexit day next March 2019 looms). The consensus among economists is that 2018 will see more frequent episodes of market volatility, even as underlying trends remain (i.e. higher rates, a weakening dollar, and a supportive backdrop for risk assets).
THE WEEK AHEAD
US Federal Reserve meeting – first rate hike for 2018? This trading week will be dominated by new Chairman Jay Powell’s announcement of the outcome of the US Federal Reserve’s two-day policy meeting - taking place tomorrow and Wednesday - with futures markets, analysts and investors expecting the first interest rate hike this year. Clarity is anticipated over whether four rate rises beckon in 2018, as previously hinted by officials.
New US tariffs on Chinese imports? President Donald Trump is expected to announce this week sweeping tariffs on imports from China, with industry groups and some lawmakers scrambling to prevent a new front in a potential trade war that could reverberate across the U.S. economy. Early indications suggest White House officials are braced for tariffs across a wide variety of consumer goods and, whilst the size and scope remain under debate, the U.S. Chamber of Commerce has warned that annual tariffs of as much as $60 billion on Chinese goods would have “devastating” consequences for the U.S. economy - leading to rising prices for U.S. consumers and businesses alike.