pc
nid 93221
Jun 15, 2026
kgurnani@vixio.com
Australia
Australian Securities and Investments Comission
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2295 charsAustralian Securities and Investments Commission Invites Feedback on Pre-Hedging Regulatory Guidance
On June 24, 2026, the Australian Securities and Investments Commission (ASIC) released Consultation Paper 389 Proposed Regulatory Guide on Pre-Hedging, seeking industry feedback on draft guidance addressing pre-hedging practices by market participants. The proposed regulatory guide aligns Australia's regulatory approach with international standards developed by the International Organization of Securities Commission (IOSCO), building on IOSCO's Final Report on Pre-Hedging published in November 2025 and ASIC's previous February 1, 2024 open letter to market participant chief executives.
The draft guidance clarifies how existing legal obligations apply to pre-hedging activities, helps market participants assess when pre-hedging is appropriate, and highlights practices that manage conduct risk and maintain market integrity. Pre-hedging involves market participants trading in anticipation of client transactions to manage risks associated with primary capital raisings and secondary market transactions. While pre-hedging can support liquidity and efficient execution, it raises conflicts of interest and market abuse risks when participants trade while possessing confidential information about anticipated client transactions. The guidance applies to Australian financial services (AFS) licensees and other entities undertaking pre-hedging, and provides guidance on conduct clients should expect from these entities. The proposed regulatory guide does not introduce new legal requirements. ASIC notes it has previously taken enforcement action against entities for poor pre-hedging practices, including ordering Australia and New Zealand Banking Group Limited (ANZ) to pay $135 million in December 2025 for misconduct relating to a $14 billion government bond transaction, and ordering Westpac Banking Corporation to pay $9.9 million in January 2024 for unconscionable conduct in executing a $12 billion interest rate swap transaction.
The consultation closes at 5:00pm Australian Eastern Standard Time on July 27, 2026. ASIC intends to publish the final regulatory guide in the fourth quarter of 2026 following consideration of consultation feedback. Submissions should address whether the final guide should include examples of observed better practices to support implementation.
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2043 charsAustralian Securities and Investments Commission Invites Feedback on Pre-Hedging Regulatory Guidance
On June 24, 2026, the Australian Securities and Investments Commission (ASIC) released Consultation Paper 389 Proposed Regulatory Guide on Pre-Hedging, seeking industry feedback on draft guidance addressing pre-hedging practices by market participants.
The guide is intended to replace ASIC's 2024 CEO letter on pre-hedging and align Australia with the final recommendations issued by the International Organization of Securities Commissions (IOSCO).
The draft guide requires firms undertaking pre-hedging to have:
Formal policies and procedures: Firms should maintain documented policies governing when pre-hedging may be used, who can approve it, acceptable execution strategies, escalation procedures for higher-risk transactions.
Client disclosure: Firms should clearly disclose that pre-hedging may occur, the circumstances in which it may occur, potential impacts on pricing and execution, risks to clients arising from the practice.
Client consent: Where practical, ASIC expects firms to obtain explicit and informed client consent, transaction-specific consent for larger or more complex trades.
Management of confidential information: Because pre-hedging involves trading while possessing confidential knowledge of a future client order, firms must have information barriers, access restrictions, surveillance controls, procedures to prevent misuse of client information.
Conflicts-of-interest controls: ASIC expects firms to identify and manage conflicts between the firm's trading interests, the client's execution interests.
Monitoring and surveillance: Firms should maintain trade surveillance, communications monitoring, compliance oversight, senior management supervision.
The consultation closes at 5:00pm Australian Eastern Standard Time on July 27, 2026. ASIC intends to publish the final regulatory guide in the fourth quarter of 2026 following consideration of consultation feedback. Submissions should address whether the final guide should include examples of observed better practices to support implementation.