ASX Proposes IPO Reforms To Boost Market Competitiveness

The Australian Securities Exchange (ASX) unveiled a set of proposed reforms on Thursday aimed at revitalising the nation’s capital markets and addressing the ongoing slump in initial public offerings (IPOs). The reforms are designed to enhance Australia’s appeal as a destination for global investors and streamline the IPO process, making it more efficient and flexible.

In a detailed response to the Australian Securities and Investments Commission (ASIC), the ASX outlined its plan to improve listing procedures, broaden investor access, and better compete with international markets. The move comes amid increasing pressure from ASIC for the ASX to take a more proactive role in expediting the listing process, which has been sluggish in recent years.

The ASX highlighted a decline in the number of listed companies, attributing the trend more to cyclical factors rather than any long-term structural issues. The proposed reforms aim to address these challenges and bring more activity to Australia’s capital markets.

Among the key proposals, the ASX suggests that ASIC shorten the exposure period for new IPO listings to no more than seven days and allow retail investor applications to be processed during this period. The length of time required for regulators to review a company’s prospectus has long been criticised by investment bankers and fund managers, who argue that it hampers the speed and efficiency of the listing process.

This move aligns with similar efforts in regional markets like Hong Kong and Singapore, which have also revisited their IPO frameworks to maintain competitiveness in light of global market volatility.

In addition to streamlining the IPO process, the ASX proposes reducing the minimum “free float” requirement for new listings, as well as making the corporate bond market more efficient and accessible to retail investors. The changes would enhance flexibility for issuers while expanding investment opportunities for individuals.

James Posnett, General Manager of Listings at ASX, said, “The opportunities outlined in our submission are designed to enhance the attractiveness of our listed markets to help them remain competitive with global peers and private capital, as well as provide retail investors with more wealth creation opportunities.”

In 2024, IPOs on the ASX raised $2 billion, according to LSEG data, with $1.3 billion coming from a single company, Digico, a data centre trust. Dealmakers have pointed to factors such as global market volatility, the rise of private capital transactions, and rigid IPO regulations as key reasons for the slowdown in IPO activity.

ASIC has received nearly 70 submissions from a wide range of stakeholders, including industry bodies, market operators, fund managers, and law firms. A spokesperson for the commission stated, “We are currently reviewing the feedback and intend to make non-confidential submissions available in the coming weeks.”