ASIC's Symposium on Australia's public and private markets was held at the University of Technology Sydney Broadway campus on 10 June. The following facilitated Private markets, where to now? panel followed Joe Longo's remarks and the State of Our Markets panel.
Calissa Aldridge, Executive Director - Markets, ASIC: Thank you for that thoughtful and insightful panel session. It's clear that public and private markets both play a critical role and are important for the future of our success here in Australia.
Now we're going to move on to the second panel, so thank you, James, you can stay there. This next one's on private capital markets. These markets have obviously grown significantly over recent time, as our Chair outlined. They've tripled in the last decade, for example. While off a low base in Australia, there's a consensus in the submissions that we received that there are structural changes, and something that we need to focus on.
So what opportunities does this change create for Australia and what does that mean for access to capital, investor protection and market integrity? This panel will explore all these questions, focusing on where private markets are going to head to, thinking about some of those opportunities and challenges that we need to confront.
So joining James are our four esteemed panel members. I welcome to the stage Simone Constant, ASIC Commissioner; Matthew Michelini, partner and Head of Asia Pacific at Apollo; Jason Collins, Managing Director, Head of Australia at BlackRock; and Peter Warne, Non-Executive Director of UniSuper, Virgin and a range of others. So thank you, over to you, James.
James Thomson, AFR, Chanticleer Columnist: I just might need one more bottle of water here. Here we go. Well, we've got a great panel here to really dig into the private markets side of things, which we gave you a bit of an entree in our first panel.
Peter, we could barely find a better placed panellist to talk about the crossover between public and private markets. You're the Director of UniSuper, which, of course, invests in both public and private markets. You're also the Chairman of Virgin, who Guy Fowler has helped steer onto the public markets and out of private ownership. From the perspective of a director, what are some of the differences between those two sides of the coin, and what's driving the growth in your mind in private markets?
Peter Warne, Non-Executive Director, UniSuper: The big difference for a director is just the focus on scrutiny and reporting, and just think about the range of things a company, a listed company, has to do that an unlisted company doesn't have to do. Just go through the annual report setting, semi-annual results coming out, an annual general meeting, a remuneration report, continuous disclosure, following what the analysts are saying, so you have to advise the market if it's out of line with what your internal rates are. You have to have director elections. So they're all things I would call big R regulation.
And then there's a whole lot of other stuff which is small R regulation, which not much ASIC could do about that. But when you think about it, the shareholder communications, visiting shareholders regularly, the ASX corporate governance rules, which is getting a lot of play, which I mentioned several times. Talking to analysts, analyst conferences, road shows you have to do, going and seeing proxy advisors, all things which are not written in the corporations law, but every company has to do and it's expected that your public shareholders are going to have to do those sort of things. So it's just a huge time burden on management and on the board.
Thomson: You're not talking yourself out of the role as Virgin Chairman, are you?
Warne: Oh, it's so much fun.
Thomson: Just given the super fund perspective on our last panel, do super funds need a thriving public market as well?
Warne: Absolutely. There's no doubt about that. The vast majority of super fund assets, or the majority of super funds, are in the listed markets, either in equities, or whilst government bonds aren't listed, they're a public market and an actively traded market. So still the vast majority of assets are that way. In UniSuper's world, over 80% of its total assets are in the public markets in one way, shape or form. So they need it (a) for liquidity, and then (b) for just a price-setting mechanism that they have confidence in. So that is absolutely required.
Thomson: Do you feel they're thriving at the moment?
Warne: Well, they're not growing as rapidly as they perhaps have been in the past. They're certainly still very active, and certainly people can get set in good volume when they want to, to either sell or buy. So they're still, I'd say, in good shape. But they are not growing as fast as we would like to see them grow.
Thomson: Yes, fair enough. Jason, BlackRock's been a champion of public markets for decades, one of the great democratisers of public markets, really. But in the last few years, the business has made three big bets on private markets. Can you tell us why that's occurring inside the home of passive investing in public markets?
Jason Collins, Managing Director, Head of Australia, BlackRock: Yeah, it's a massive strategic tilt that the company made last year. We announced three acquisitions, two of which have been completed. The first being Global Infrastructure Partners, a very large infrastructure player, quite large in Australia as well. The second is Preqin, which has not been closed yet, but that's a large private credit business. And the third is Preqin, which is a data provider. And actually, five years ago, the company acquired another business called eFront, which is a technology company which really shines a light on portfolio holdings in private markets. So it actually looks at data from GPs and helps trustee boards and other organisations to understand what they own, so through funds and through vintages of funds.
So, yeah, a big strategic tilt. It was made for a couple of reasons. Very big-picture thinking from the founders of the firm. Essentially, they felt there was a mismatch between the demand for capital and the traditional sources of capital. And by that, I mean governments. Governments around the world have high debt-to-GDP levels, above 90% in the world. The US is 125%, Japan over 200%. It's quite well known. Governments around the world have reducing tax bases as well. You've got, in the EU, 22 of 27 member states, the working-age population's declining. You've got, in Australia, one in 10 people will retire in the next 10 years.
So with high debt-to-GDP, a lower taxation base in the future, there's a real need for private capital to meet some pretty critical needs in the global economy in infrastructure. So really big-picture thinking around how to solve this mismatch. And I can go into why there's such a critical need for private markets at the moment in infrastructure, but that's kind of the thinking behind it.
Thomson: Yeah, and just in Australia, does the business reflect that tilt? Like your Australian operations, is there a lot of that stuff?
Collins: Yeah, I mean, it's amazing. I started BlackRock 12 years ago, and the first seven years of my life was selling BlackRock to Australia. And the last five years, I've been selling Australia to BlackRock. And on the ground now, we have a massive private markets investor presence, coming up to 50 investors, about $30 billion of assets deployed in private markets in Australia. We actually invest around $280 billion in Australia's public and private markets. 80% of that money is actually from offshore investors.
So we've got a huge voice now in the policy settings for foreign investors. And our business here used to be a product and distribution business. It's now an investing business. It's now a technology business to reflect the fact that we're actually facilitating so much foreign flows into the country.
Thomson: Yeah. Matthew, Apollo makes no bones about which side of the fence it's - you sit on. I'm not sure if people have read Apollo's submission, but it basically calls the public markets in Australia little more than a concentrated bet on a few miners and four-bit banks. Which I love, being for its honesty, if nothing else. But tell us a little bit about the sort of global boom in private capital, and how that is changing the market down here.
Matthew Michelini, Head of Asia Pacific, Apollo: Sure. By the way, it's not just the Australian market. It's markets everywhere. A lot of what the last panel talked about or touched on, and a lot about what this panel is touching on, is actually about portfolio construction. And it used to be OK to put publics together. 60% equities, 40% bonds, and maybe a little bit of risk. And that was because when you bought the S&P, you were buying into a diversified stream of cash flows in companies that represented the underlying economy. In the debt markets, something very similar.
The challenge is that the structure of the markets changed quite significantly over the last 20 years. And so when all this portfolio application theory came out 20 years ago, you could put a 60-40 portfolio together, you could get a diversified stream of cash flows, you could get stocks and bonds correlating negatively, so you had somewhat of a diversified portfolio.
As the structure changed, at the same time you had every central bank across the globe print money. You had every government going into a fiscal deficit. Most of that surplus went into the financial markets. There's very few places that can absorb all that liquidity. It's the European markets, it's the Chinese markets, it's the US markets, it's commodities. And then you start to have smaller tier two markets that can't absorb all that liquidity.
So the public markets, by and large, became indexed, correlated, concentrated, all driven by passive money. Passive money is effectively daily liquid funds that buy when they get inflows, sell when they get outflows, irrespective of the underlying cash flows of the business.
And so the question is not whether concentration, as the last panel talked about, is it good or bad. The question is, is it a fact? And so how do you achieve diversification? How do you not lever a big chunk of a retirement system, a big chunk of an individual savings to NVIDIA, which can lose $800 billion in a given day? And so every investor across the world is asking, how do I get diversification in my portfolio?
The easiest way to get diversification right now is adding privates. And that didn't used to be the case, by the way. Privates really used to just be the venture capital hedge funds, private equity. But what the US did, and what you're seeing Europe do, and even what you're seeing Australia do a little bit, is you're seeing governments ask the private markets to step up and do more, and the banks to do less. And so now you have private markets that range from AAA-rated risk, all the way down to equity. So you can create a diversified portfolio with publics and privates at all points along the risk-reward spectrum.
I think that another mention was made by Raph about the over-indexation to US markets. You're going to need other sources of diversification. All of a sudden, now you need currency diversification, and so on and so forth. But the biggest and easiest way to get diversification in a portfolio is a blend of public and privates.
Thomson: Thanks, Matt. Simone, one thing I really like about the prices that ASIC's been through is, as Joe said, you try to really keep an open mind, not prejudge the outcome. You've seen all the 90 submissions, including the 40 that are private. You've done 40 meetings, I believe, with industry participants. What's surprised you about the private market feedback, particularly?
Simone Constant, Commissioner, ASIC: I would say the biggest surprise was probably an upside surprise in terms of the number of submissions and the quality. Now, I say surprise; I actually hoped it would be that. I often say publicly I'm a big believer in Australia's financial system and all the participants, and I think you can see that from the attendance tonight. But it didn't mean I expected that to come through.
So I think to get 90 submissions, which we did, 50, as you say, public, 40 private, and then to have had so much engagement as well. And the meetings, the engagement, some of those with people who put in submissions, who said, do you want to come and talk to us about it, do you want to spend some time, including folks actually who are here with me this evening. The quality and breadth of the submissions as well, though.
I think some of them, some of the submissions, you mentioned the Apollo submission. Let's be honest, the Apollo submission was extraordinary, I think, and the amount of time and thinking that went into it. So there was a quality of the submissions, but the breadth. Every industry, I think, was, every part of the financial services industry was covered. We had firms, we had super funds, we had banks, we had - even insurers responded. Obviously, there were lobby groups, as you mentioned. Individuals, and we heard from an individual tonight. So just the people who took the time.
And I think in terms of actual surprises in what we read, I think I got surprised, pleasantly surprised about the interest from offshore. And you can see we've got Blackrock and Apollo here tonight. That's no coincidence. It was a real pleasant surprise that offshore, we had such big global players so interested in our markets that they took this so seriously.
And I think also the numbers. So we were honest when we put out the discussion paper and said, we're probably not getting the numbers right. We don't have the data to do so. What was really confronting, though, was a few of the submissions, including some of the super funds, including the Apollo submission, said you're way off. You should be thinking about it this way.
And one of the numbers that stood out to me was that 96% of Australian companies that earn over $100 mil in a year, they're private. That's really significant. When you look at the employment numbers, it's about 85% of people are employed in the private. So the way to think about the size of the private prize, I think, was probably a surprise for me as well.
Thomson: Does that raise any concerns that something you weren't entirely worried about being systemic, might actually be closer to systemic than you think?
Constant: Absolutely. So I think what wasn't a surprise was the number of responses that said, look, you don't need to worry about this part, or you don't need to worry about this part. You expected that, and that's great. We invited everyone's perspective.
Another thing that did surprise me, actually, was the number of submissions that said, actually, this is something you should be worried about. And one area which really came through with maturity were the number of private credit, for example, private credit participants, who said, actually, you should be thinking about a bit more, if not regulation, more transparency in the private credit space.
And some of that was geared toward end investor. Some of that was geared toward protection or awareness and transparency to borrower. But some of that absolutely was geared toward, you need to really confront how significant this is. It may not be a problem, but you need to know the size of this wall in case it becomes one.
Thomson: Peter, there's clearly some regulatory differences, I don't know if you'd call them differences or gaps, between public and private, but which ones sort of stand out to you? And do you have a sense of whether we need to close, we need to regulate these two markets more similarly? Just grab your mic there, Pete.
Warne: The couple of gaps that really stand out, I think, are valuation. Public market valuations are the last traded price at the 30th of June for one BHP share. Whereas if you've got valuation of properties, for example, the valuers look at what the last time that a property like that traded, which could have been two years before. And it just is ridiculous. I mean, we saw that in spades post the 2022 rise in interest rates. All the listed REITs were down 30%, but the on-balance-sheet single property valuations stayed constant for another 18 months. I mean, that's just ludicrous. And that really calls into question, I think, private markets when valuations are so clearly different.
So I think a clearer definition, and maybe it's a gift for ASIC, that could be really clear about what we're valuing here. What is the real purpose of the valuation in private markets? Is it what we think that we could sell this particular asset for on the 30th of June, as opposed to what the latest model said, or the latest time we saw a property like that sell? I think there's some clarity on that.
And then more clarity on the real liquidity attributes of particular assets. I think Raph talked about this a lot. And when we're offering through super funds at least one day, if not three-day, liquidity on assets, clearly, if you're trying to sell the whole asset in the market, it would take six months. I think we have to be very careful about that. We need some better definitions of what liquidity are, what valuation is, and really more transparency about what the true investment process is. I think they're all gaps, I think, that could do with tightening up.
Thomson: Yeah. Matt, Peter's taken us to the issue of valuation, which you must get a lot. And I know there's differences in the regulatory framework between the US and Australia at the moment. What does good regulatory intervention look like around valuations and transparency?
Michelini: Look, I think there's - on valuation specifically, I think that I agree quite a bit with what Peter said. I think that Australia thinks about this a little bit from an equity lens and a real estate lens, and I'll throw in the credit lens. In valuation, there should be principles around good valuation. And by and large, third party, you either need some third-party independent evaluation agent coming in from time to time to evaluate those marks, or you need the benefit of having a third party having validated the price from time to time.
For us, almost everything that we do, especially on the credit side, we syndicate. We take some, we syndicate some, so there's some price checks and price validation, and then we use third parties to mark that to market along the way for things that are illiquid.
But I caution against - not in equities, but in credit, by and large, I caution against using marks or quotes as an indication of where you can move the entirety of a position. Because the liquidity structure of the fixed-income markets, at least in the US and in Europe, have changed quite significantly. I mean, it takes five days to move a bond without moving the price. 26% of investment-grade bonds in the US haven't been traded in the last month. So broker quotes aren't a really good, reliable source of where you can move a position on any given day.
But valuations, I'll go back to Raph's point again from the last panel, valuations actually are quite important in the private markets for a few reasons. One is, as an investor, you need to know your risk positions. Whether they're public or whether they're private, whether they're in your I-can-liquidate-or-not-liquidate bucket, you need to know from a portfolio perspective what your risk positions are.
Number two, very often managers earn fees on NAV. And so you take a look at like a private credit fund that's picking. OK, well, you're paid on pick, and if you never take a write-down for the company that's not picking, that's a good thing for the manager, not necessarily a great thing for the investor.
But the other thing that I'll mention that Peter said is, if you go all the way to the other end, which is for private equities, for instance, you're not looking to sell those on any given day. And so the big question in valuation is, you can have a third party come in and value those, but that's not the part of your portfolio you expect to sell and move on any given day. You're not liquidating them today. So you can look for some valuation framework, but then it's, what is the construct? Is it to move it today, or is it to move it over some reasonable period of time? And so I think if regulators give some general principles about valuation practices and constructs, it's actually quite - I would imagine that the industry leaders are already there, and most other firms would catch up.
Thomson: Jason, your ultimate boss, Larry Fink, he's sort of made no secret of trying to let a hell of a lot more sunshine into this area by using data, including from some of the sources that you mentioned earlier, to try and make private capital investments publicly tradable. Do you think you can crack this nut? And how much of it is about getting this valuation question right?
Collins: So the holy grail would be to be able to index private markets and allow access to retail investors, mums and dads, more easily. Now that's a fair way off. The Preqin acquisition, Preqin does a couple of really interesting things. Firstly, it tracks 190,000 funds across 60,000 managers. It tracks performance data. It tracks the underlying portfolio companies within the funds, transactions there. And ideally what the benchmarks can do, firstly it helps clients track their own performance against the industry. But if you can find a way to create, and it could be tokenisation, it could be an ETF across private markets, that would be an incredible breakthrough.
I think Larry in his letter wrote, I don't really know how we're going to do that yet, but have faith in us, we managed to do this in ETFs, and that was a new technology which has really taken off. That's part of the reason that we did the Preqin acquisition, to try and bring benchmarking and transparency to the market. It's a really big task to collect that data, I think that's a big task ahead of ASIC if it wants to go down that path. But certainly we've been having discussions with ASIC around that.
Thomson: Yeah, Simone, clearly this issue of valuations is at the heart of so much of our private markets. We just had a couple of suggestions about regulatory guidelines rather than necessarily something prescriptive. How does that sound? That idea of setting some standards, I guess, that help bring the lower end of the market perhaps up to the industry leaders?
Constant: Yeah, it's unsurprising that valuations has been front and centre. A few really great thoughts, though, that come through tonight are reminders. One is it's about valuation in context, and different investors, it might be quite different, may approach valuation differently. For example, we've heard tonight about illiquidity premium, also controlled premium.
I think the point about valuation in context is also important because when we're thinking about valuation by super funds, I can see a lot of my APRA colleagues here tonight who work and spend a lot of time on valuations when it comes to super funds, so there are some very developed standards in parts of the Australian market for valuations.
More broadly, though, absolutely where that's absent, guidance is appealing. So being very public in that statement; guidance is appealing. Guidance does seem like the right approach. I think guidance, though, only goes so far with valuations. You've got to think, why can valuations be a problem? Well, it's when it's paired with other problems, isn't it? So you've got a liquidity problem, which has come out tonight, so what's disclosed about liquidity? You've got a conflicts problem, for example, so there's a valuation that leads to unfair treatment of investors because there's conflicts of interest. So it's not just valuation for valuation's sake or transparency around that for its sake. So it's looking at the related issues.
And then I think it's also not just about valuation per se and, say, doing it quarterly. Nor is it just about who does it. It's the basis of it and the disclosure. And what I mean by that is some may know there are practices that think about valuation on an as-developed basis. So you have a block of land today that might be worth X amount, but the valuation that's used and as part of the distribution of product is, oh, once it's developed and there's a piece added to it and this is done and that is done. Even if you think about valuation that way, you need to match that with some effective disclosure.
And I think that leads to the final point. Effective disclosure is only effective if we get some alignment or guidance on terms. There's some interesting terms used to support valuations and practices in different parts of the private markets and actually some terms should mean something when they're working their way into valuations and people investing or people borrowing.
Thomson: I thought you were going into the unrealised gains territory there for a moment. Peter, super funds have been under a lot of heat about valuations in the last - of unlisted assets in a little while. And my sense is that APRA has really asked the industry to pick up its game. Have you learnt anything from that process, or is there any learnings from that process that you would particularly point to that might be helpful as we think about the broader private market question?
Warne: Well, you're right. APRA has been really focused on that. So I think all super funds have now moved to quarterly. It begs the question whether there needs some adjustment; is quarterly even frequent enough? And where there's been substantial market moves in between quarters, what's the response to that? Where we're buying and selling units on a daily basis with our members. So I think that process.
Certainly the move to independent valuers, and regularly changing independent valuers, has been part of all that. But I still think we need a clearer definition about what we're valuing. What is the purpose of this valuation? What is this valuation actually supposed to mean? I think we had a few years ago a well-known private equity investment held by a number of superannuation funds, and each super fund had a wildly different valuation. That just brings into question the whole credibility of what we're talking about here when you've got that situation arising. Now, each super fund was getting its own independent valuation, I'm sure, but it still seems a bit strange when you get results which are so wildly different.
Thomson: Matthew, lots of the big, Apollo I know a lot of its other peers in the US have been very intent on going down the investor scale from institutions down towards wealth management, for example, more towards the individual level. Does that bring up access when we're giving more individuals more access to private markets? I mean, in theory, it's a good thing that they get to balance their portfolios like the big guys do, but does it come with issues in your view?
Michelini: It does. Look, as an overarching theme, it's a good thing to use the term democratise the access to private assets. Private assets, as we noted, used to just be risky; private equity, venture capital, hedge fund, and that was only really suitable, I'll use that word intentionally, for big institutions or high net worth clients with a diversified portfolio who were well advised and financially sophisticated.
As the definition of private markets has evolved massively over the last 10 years, you now have, again, investment grade product that used to sit on bank balance sheets that's now being originated by the likes of Apollo, the likes of BlackRock and others. And then you have stuff that's a little bit more yieldy, like direct lending, or what most of the headlines call private credit. And then you have things like infrastructure and you have things like real estate.
So the short answer is yes, it's a good thing. The question really comes down to is it appropriate for the investor base? If you look at the average person walking down the street that doesn't have financial advice, that doesn't think about the financial markets all day, that probably needs liquidity or access to liquidity more often than not, going into an ETF structure that's part public, part private, sounds like a really good solution for that. If you are somewhat advised, if you have somewhat of a portfolio, if you don't need daily liquidity, then doing something like direct lending or asset-backed credit or infrastructure could be appropriate.
And so in our minds, yes, it is good to give individuals access to private markets. Individuals globally are massively under-allocated private assets. They're just sitting in the concentrated stock markets and the concentrated bond markets. Giving them tools to diversify their own portfolios is a good thing, but one needs to really think about the suitability of the product for the cohort of the underlying investor.
Thomson: Can I just ask you, you mentioned private credit there, Matt. Do we have a slightly rosy view of our private credit sector in Australia? I know when I talk to visiting Americans about what's happening in private credit in the US and other places, it's a very different industry. I mean, here it's sort of mainly property lending, isn't it? And whether we've stuck a sort of cool badge on.
Michelini: The short answer is private credit does mean something different in Australia than it does in the US, but it is converging. So private credit in the US, when you read the headlines, typically talks about direct lending. Our own personal view, our own firm view, is that we're not in a bubble in direct lending, but it is cyclical, and we are at the top of the cycle. That's both in the US and that's probably in Australia as well.
But if you talk about the private credit markets all together, you're right, you're talking about property lending. You're talking about asset-backed lending. You're talking about direct lending. In asset-backed lending, that could be mortgages, that could be autos, that could be credit cards.
I think what we have observed here, outside of the staples of direct lending and real estate lending, is you do have a private asset-backed market. And I think increasingly, the banks are starting to think about, I think the banks are starting to think about how can we partner with private capital to be balance sheet-like in some businesses and be more fee-driven, less balance sheet-driven, and how do we really put some of this balance sheet in private capital hands to price it on a market basis? So I think that that trend will evolve in Australia over the next couple of years.
Thomson: We've got time for one question, if there's someone out there with a quick one. Simone, I want to ask you about the private credit question there. Do you worry that there's concentration of risk in private credit in property? Is that something we should be thinking about?
Constant: We wouldn't say worry yet. We've got to get the data together. We would say we worry we don't yet have the data to answer your question. And then if the data suggested that, which anecdotally it does, and by the way, the submissions did. I've read all the submissions and this is something that comes through, then that is something we should pay attention to. The concentration to real estate, which seems to be a big part of the domestic private credit story, we do know in the past that's been, when there's been system shock, that's where it's been. So that is one of the key reasons we need to get more transparency and more data to understand.
Thomson: Jason, I'm going to do the Joe-Longo-for-a-day trick again. Five to 10 years, how do we make - what's a change you'd like to see, could be market-led or regulatory-led, that would help private capital markets become more fair, efficient, resilient?
Collins: Yeah, so in the next, I would take it out a bit further, five to 10 years, say 10 years, you've got a wave of retirees that can come out of their super funds, and they'll need advice. And because they need advice, they will need access to private markets. And right now I'm not sure the products that are being offered to the retail market, or even the wholesale market, evergreen funds for example, which was highlighted today by Ian Patrick from ART, are the right set up necessarily under the current needs of investors.
So there are some developments in the UK, with the FCA, with LT Funds. In Europe with, are they called, ILB funds I think they're called, and policy settings around these developments where you can mix private and public markets are pretty encouraging. Right now we don't have any evergreen structures. The longest we know we've got is a month's redemption cycle, because we think there's a bit of a risk with the liquidity duration right now.
Thomson: Matt, what would you like to change?
Michelini: Well I'm going to do one better than Guy, and I'm not going to cop out, I'm going to pander. I actually think the reason we took the time to write the report that we did was it is rare for a regulator to say, to accept the private markets as something that's not going away. It's something that's here, it's something that is, that can be a good thing. And the acceptance of, with the right engagement, and the right regulatory approach, without it being a witch hunt, that they can create a very robust access mechanism for private assets, as well as a robust investment ecosystem here in Australia.
I think as you go across the world that isn't the case. Most reports you read on private credit or private assets is, it's systemic risk, it's going to take the world down, it's going to take the banks down, it's going to take our country down, it's going to do this. Here, here it's been, we accept private assets are here to stay. How can we have Australia most productively engage with them? So I think this type of engagement will lead to good outcomes.
Thomson: We call that sucking up in Australia. Peter, you've raised some really good points about valuation. Is there anything else you'd sort of call out in the next 10 years that we could do?
Warne: Well, in addition to valuation, I think collecting and publishing data on a system-wide basis, would actually give us all a lot more confidence in exactly what the private markets are and the size of them, the depth of them, and the processes that use them. So I commend ASIC in endeavouring to collect more data.
I think it's important to remember one of the big triggers for the GFC was the mortgage lending market in the US, and that was all done on a state basis and no one collected the data. So the Fed didn't actually know how big this thing was until it actually blew up. So I think we'd all be better off with knowing more data and understanding whether there are system risks or not system risks there, to manage the whole process better. But liquidity, valuations and transparency are the three.
Thomson: Simone, you've obviously been working towards this paper over the last quarter of the year. But can you give us a sense of some of the priorities that have come out of this view? Valuations, transparency, understanding the size of the sector better. Are they the top three, or is there a few you'd add?
Constant: So, I think that's the polite way of not asking me what I do.
Thomson: Oh, well, if you're going to tell us, please go for it.
Constant: So the focus is, I think focus areas for us have come through tonight. Continuing to look at wherever ASIC, within ASIC's gift there's something that's getting in the way of entities being able to see through growth in a listed market. That really comes through in the submissions. So if there are ways that ASIC can make it more viable to be medium to long term focused as a company, so that's on the public market side.
On the private market side, the convergence theme that's coming through we consider pretty important, in the sense that it's not just about the getting companies on the board. It's not just about the companies. It's also about that access and participation. So we need to ensure there's the opportunity to participate. Australia is a nation of investors, like a world-leading nation of investors, not just through your super funds. We need to preserve that participation. So areas that can bring that forward are actually data and transparency.
So the data and transparency side, yes, it's really important from the system side, but it's also important for that convergence and opening up private markets to individuals. And something really exciting in the submissions we received are entities like BlackRock and some of the other big internationals thinking how can we give that information and use transparency in that way?
Finally, on the downside, it's probably come through in the remarks tonight. We will be accelerating our work on private credit. We are accelerating our work on private credit. And as I said, credit to many in the industry who brought that forth in their own submissions. Private credit, as we keep saying, private credit is good for the economy and access. We're about the economy and the financial system. It is good for the economy, for investors and borrowers, if done well. We need to first consider is it done well, where it's not, shine a light on that, and dimension what that done well looks like. And that's something we'll be accelerating.
Thomson: Thanks, Simone. It's a great outlook, we'll look forward to what we're going to get towards the end of the year. Ladies and gentlemen, will you please thank Simone, Jason, and Peter.
