Institutional funds will be put under the spotlight by a parliamentary committee on the risks of their high ownership of the Australian Securities Exchange (ASX).
The House of Representatives Standing Committee on Economics inquiry into the implications of capital concentration and common ownership in Australia would look to investigate banks, superannuation funds, investments funds, and hedge funds.
Committee chair, Tim Wilson, said the inquiry would “shine a bright light under the hood” of the ASX ownership and would ensure the law, regulations, and regulators would address challenges of the future so it could empower citizens and not "organised capital".
“This inquiry is urgent – there is already high concentration of ownership of ASX listed companies by an increasingly small number of ‘mega funds’ and that trajectory will increase,” he said.
“The House Economics Committee has been asking regulators about these risks for nearly a year. Recently the chair of the ACCC [Australian Competition and Consumer Commission] informed the committee common ownership posed threats to competition when it hits 10%, yet some have already hit 30%.
“We don’t want a stock exchange where a handful of ‘mega funds’ make all the decisions, and ordinary investors are locked out and higher costs are paid by Australians. Some ‘mega funds’ have already said that as their ownership increases they’d de-list public companies.
“Common ownership’s flow-on risks higher prices and collusion, corporates imposing public policy agendas while bypassing democracy, and disempowering ordinary investors. The law shouldn’t empower capital over citizens and that’s what we’ll be inquiring into.”
The inquiry was open to submissions until 13 September, 2021.