Welcome to Edition 121 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.
In this Edition, we cover: (i) quarterly update on M&A, ECM and private equity activity; (ii) ASIC’s market cleanliness report; (iiI) the new Consumer Data Right law; (iv) RBA’s meeting tomorrow; and (v) ASIC’s product intervention power consultation.
YOUR KEY BOARDROOM BRIEF
Quarterly update on M&A, ECM and private equity activity. See G+T’s Expert Adviser: Quarterly Update 2 August 2019 for an overview of Q2 activity across these markets, recent deals, interesting deal mechanic developments and corporate finance transaction tips for advisers and other market news.
Consumer Data Right law awaiting royal assent. Last week, both houses passed the Consumer Data Right (CDR) legislation, which is intended to provide consumers with greater control over their data and will be implemented initially in the banking, energy and telecommunications sectors before being rolled out across all sectors of the economy. Entities will need to be accredited before they can receive consumer data and strict privacy safeguards will apply to data transfers. The new privacy requirements — which will take effect the day after royal assent — go further than the Government previously recommended and there will no doubt be concerns as to how to efficiently implement and manage a multi-tiered privacy compliance regime (ie, managing compliance under the Privacy Act with compliance under the new privacy safeguards). See G+T article “We have a Consumer Data Right!” for more on the CDR.
ASIC releases report on market cleanliness. Market cleanliness is a measure of possible information leakage and likely insider trading before material price sensitive announcements. As foreshadowed, the Report showed overall cleanliness for the 2016 – 2019 review period was stable and reminds Directors and senior management involved in M&A deals of the importance of robust security measures. Key findings include: (i) on average, 0.6% of accounts that traded before material price-sensitive announcements were deemed suspicious; (ii) suspicious accounts profitably traded on average 5.1% of the volume before each announcement; (iii) while the percentage of suspicious trading accounts remained stable, the volume traded by these accounts increased; (iv) there was more suspicious trading before M&A announcements; (v) there was more suspicious trading and abnormal price movements before unscheduled announcements; and (vi) announcements by smaller companies were more likely to be unclean. See ASIC’s media release.
THE WEEK AHEAD
RBA meets tomorrow. A slightly higher than anticipated (although, overall, still subdued) inflation print last Wednesday is largely expected to see the RBA keep interest rates steady. As tipped, though, the US Federal Reserve cut interest rates by 0.25% last week – being its first in a decade and no doubt pressure on the RBA to consider lowering its cash rate to a fresh record low in coming months.
ASIC’s consultation on new product intervention power close this Wednesday. ASIC’s draft guidance on the use of this power, which was introduced earlier this year in response to the Hayne Royal Commission, covers among other things: (i) the meaning of significant consumer detriment; (ii) the types of interventions ASIC can make; (iii) limitations of the power; (iv) when a product intervention order will commence; and (v) the consequences of breaching an intervention order. ASIC will first use its product intervention power to stop consumer harm in the provision of short term credit.