Digital disruption key challenge for ASIC

Two major challenges facing the Australian Securities and Investments Commission (ASIC) and financial markets are digital disruption and cyber resilience, ASIC Chairman Greg Medcraft has told a CEDA event in Melbourne.

“In our financial markets these two things are going to shape so much of the coming decades,” he said.

“Cyber attacks could be the next black swan event in our markets either domestically or globally, we need to be really on our guard.”

In regards to cyber resilience, Mr Medcraft said technology and enhanced surveillance systems will be important.

“We are again continuing to focus on developing our systems to enhance our ability to detect, understand and respond to misconduct in our markets,” he said.

Mr Medcraft said recent technology advances have enabled ASIC to get better data on individual investors and behaviours that allow them to monitor and analyse markets more efficiently.

“The future lies very heavily in actually what we can do with the data,” he said.

“The data we can take from other parts of the market and actually apply that to detect, understand and then respond in a very quick fashion.” 

Mr Medcraft said ASIC is ensuring there is trust in the market by having the right people and tools to detect and respond to market misconduct such as insider trading.

In addition to cyber resilience and digital disruption, Mr Medcraft said challenges to trust and confidence in markets and ASIC include conduct risk, structural change in the financial system, complexity in markets and globalisation.

“Trust in capital markets support growth, innovation and prosperity in a well-developed economy,” he said.  

“Markets can only function properly if issuers and investors have confidence in them.” 

Mr Medcraft said globalisation of financial markets, products and services represent a big challenge but also a significant opportunity.

“Today particularly with such a massive amount of communication available to us, something that can take decades to build particularly in markets today can take minutes and sometimes seconds to destroy,” he said.