Apollo Global Management, Inc. has warned Australia’s securities regulator against “broad brush” rules for unlisted investments and has called for regulation to instead target specific asset classes.
The comments were included in one of more than 50 submissions published on the Australian Securities and Investments Commission’s website on Wednesday, after the regulator in February sought industry views on the shifting dynamics of Australia’s capital markets.
New York-based Apollo manages around A$3 billion ($1.9 billion) of credit assets in Australia, the firm said, as it seeks to tap the fast-growing pension system’s demand for unlisted assets. It argued that rules should be based on the risk posed by each asset class, to avoid imposing the same requirements on relatively low-risk areas like investment-grade credit.
“Investments with higher return volatility or illiquidity may require more active monitoring and deeper risk assessment,” Apollo, one of the world’s top private markets managers, said in its submission.
The firm used the 2023 collapse of Silicon Valley Bank as an example of an industry where high levels of reporting and transparency have not necessarily equated to more effective oversight. “Despite the stringent reporting requirements for banks in the United States, the collapse of Silicon Valley Bank and resulting contagion highlighted that transparency alone is not sufficient to prevent market failures.”
To protect against that kind of scenario, Apollo called for a review of regulatory regimes in other jurisdictions to identify areas where “additional reporting or industry engagement may be helpful,” and cautioned that “mere ‘data dumps,’ extensive disclosures, and analysis performed in isolation do not necessarily equate to ‘transparency’.”
A separate response from the Association of Superannuation Funds of Australia also warned ASIC about overly onerous rules for private investments.
“We caution ASIC around any consideration of applying public listing rules or governance standards to private companies,” ASFA’s submission stated. “Applying similar rigour to private companies may impose unnecessary burdens without proportional benefits.”
Written by: Richard Henderson @Bloomberg
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