Submission to ASIC Discussion Paper: Australia’s evolving capital markets

04 June 2025

The Business Council of Australia (BCA) welcomes the opportunity to provide this submission to the Australia's evolving capital markets discussion paper. The BCA views robust public and private markets as essential and complementary elements of Australia's capital markets. While private markets have grown in importance relative to public markets in recent years, this growth is broadly consistent with global trends, reflects the increased accessibility of private capital, and helps support business investment.

The BCA is concerned about trends in public markets, in particular, the decline in the market capitalisation of the Australian Securities Exchange (ASX) as a share of global market capitalisation and the capitalisation of the Australian stock market relative to the size of the economy. While a number of factors are behind this decline, and similar trends can be found in some other jurisdictions, domestic policy settings and regulation are also a factor. Policy settings in Australia are not sufficiently supportive of investment in absolute terms, but also relative to other markets. This in turn is reflected in the demand to raise capital locally through public markets.

Both the discussion paper and the supporting ASIC Report 807 suggest that the downturn in public markets could be cyclical and not primarily due to regulation. These findings are too complacent. There is a growing burden of regulatory accumulation that weighs more heavily on public than private markets, although regulation is a factor inhibiting the growth of both markets. Public and political scrutiny is often disproportionately applied to listed entities.

Both the Australian Law Reform Commission1 and ASIC Chair Joe Longo have recently highlighted the dire state of Australian corporate law. According to Longo, “the breadth and ambition of legislation and regulation is having real-world impact on businesses.” The BCA has accordingly supported a renewed corporate law reform effort through its participation in the Corporate Law Reform Roundtable and advocated creating a new corporate law reform body. The BCA has also opposed the introduction of revised corporate governance principles and recommendations in the absence of evidence that the proposed changes would yield benefits exceeding the additional compliance burden any changes would impose on listed entities, as well as unlisted entities that use those principles as a guide to best practice.

The BCA agrees that the growth in private markets raises a number of issues for investors and regulators, including transparency, valuation uncertainty, and liquidity. The BCA supports efforts to enhance the transparency of private market activity, including superannuation fund investments in private markets, while also being mindful not to create additional compliance burdens that might inhibit new capital formation. Additional transparency measures and regulatory interventions in private markets should be subject to rigorous regulatory impact assessment, but may have a role in increasing confidence in those markets and ensuring that they facilitate both capital raising and the efficient capital allocation in the Australian economy.

Read the full submission here.

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