Private markets under the microscope: navigating ASIC's new supervisory landscape

Private markets are no longer flying under the radar. Over the past 12 months, ASIC has sharpened its focus on the fast-growing private capital sector, responding to the migration of capital away from listed markets and the increased exposure of both retail and institutional investors. To date, the regulator has launched a discussion paper (Australia’s Evolving Capital Markets), commenced thematic reviews of private equity and credit funds, engaged in extensive industry consultation, and held its first public symposium on private market reform.

While reform is still in progress, it is already clear that ASIC’s agenda will reshape risk governance and compliance expectations across the private capital sector.

The regulatory horizon

• Private credit scrutiny (H2 2025): ASIC has flagged that it will release sector-specific research, with a focus on risk concentrations, liquidity, and investor protection.

• Surveillance intensification: Thematic reviews are already underway in valuation governance, conflict management, and retail investor exposure.

• Private markets roadmap (Q4 2025): ASIC is expected to publish its regulatory priorities for private markets, building on current surveillance of governance, valuations, and disclosure.

• Investor classification reform: The “sophisticated investor” thresholds are under review. Any recalibration could have material impacts on deal access, distribution strategies, and retail product structuring.

What can we expect from ASIC

ASIC’s review is driven by three overarching concerns: market opacity, growing systemic risk and heightened investor-protection imperatives. This private market reform agenda is part of a global pattern and ASIC has expressly stated its thinking is being shaped by international experiences in addressing these themes.

Valuation governance – The FCA's 2024 multi-firm review in the UK highlighted weaknesses in private market valuation practices, including inadequate independent oversight of valuation and poor transparency for investors. In the US, there is already established requirements for valuations.

Regulatory trend: Greater independence in valuation oversight, formalised review cadences, enhanced stress-testing, and robust documentation standards.

Transparency – Information asymmetry has been a thematic concern in ASIC's consultation process. European reforms (such as AIFMD II/ AIFMD reporting regimes) provide examples where the bar has been raised on periodic and pre-contractual disclosures, liquidity and leverage reporting.

Regulatory trend: A move towards a more standardised regulatory reporting regime, and an expectation to report more and earlier.

Conflicts and related-party transactions

ASIC is expected to increase scrutiny on fee arrangements, preferential redemption rights, side-letter arrangements, and related-party lending or service provision. In the US, the SEC has been on the front foot in enhancing private fund adviser oversight, including undisclosed preferential treatment of select investors.

Regulatory trend: Firms unable to evidence robust processes to surface, assess, disclose, and manage conflicts will face heightened enforcement risk.

Retail access to private markets

ASIC, like many global regulators, is weighing whether broader retail participation in private markets can be achieved without compromising investor safeguards. Concerns range from potential harm due to the lack of transparency on fees, portfolio risks and liquidity risks, to how the inconsistent use of terminology such as 'investment grade' in marketing collateral may cause confusion. Both the FCA in the UK and the MAS in Singapore are exploring ways to open private markets to broader investor bases, including what robust liquidity management, suitability safeguards, and product design guardrails should look like.

Regulatory trend: Increased retail access is likely to be accompanied by enhanced scrutiny on investor protection including a focus on suitability standards, tighter product governance, and enhanced liquidity frameworks.

On all these themes, we know there is a divergence of practices emerging in the market, including some early signs that the migration towards global expectations has begun. Accordingly, any assessment of best practice should be anchored in examples of international practice standards.

Lessons from recent enforcement activity

ASIC's recent proceedings against Equity Trustees in relation to the Shield Master Fund highlights the regulator's concern in the context of the rapid growth of relatively illiquid or potentially unsuitable private assets now finding their way onto retail platforms. As these asset classes migrate from wholesale pools into the super system, we expect that ASIC will be watching closely to see how trustees adapt their due-diligence frameworks to move beyond passive disclosure reviews to rigorous, ongoing interrogation of investment structure, valuation governance, liquidity management.

The case underscores the regulator's readiness to use its existing enforcement tools to further its consumer protection priority. It is also a wakeup call to the market that practices with respect to fees disclosure, valuations and related party roles should be reviewed through the broad lens of compliance the s912A(1)(a) obligation to do all things necessary to ensure financial services are provided efficiently, honestly and fairly.