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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

ASIC tells brokers to make survey views public.

3 February 2014

ASIC has made it clear that brokers who participate in market research surveys must make their views on stocks and potential trading intentions available to the public online.

The initiative comes off the back of ASIC talks with Australian fund managers, brokers and analysts after complaints by local brokers that big funds were actively using surveys including sensitive issues such as any change in views on stocks and takeover targets.

ASIC recently issued a warning against the use of research surveys last month after the world’s largest asset manager, BlackRock was asked to cease the practice globally. Although the US company was not issued with a fine or penalty they were asked to fork out $400,000 to cover the investigation costs. US investigations concluded that the practice provided, “an unfair advantage to elite and technologically sophisticated market players at the expense of others in the market”.

ASIC has also highlighted the concern that “if the funds know ahead of time that influential analysts are about to downgrade a stock, they could trade ahead of the market knowing.”

A spokesperson for ASIC said that if an analyst took part in a research survey, the same information given to an investment bank should also be made available to the public to help minimise the possibility of trading on inside information.

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