2 April 2019

Coalition expanding retail investor access to corporate bonds

Note

The Morrison Government has today committed to consult on further reforms to develop the corporate bond market.

A strong retail corporate bond market will benefit both Australian businesses and Australian investors. It provides Australian companies a viable funding source to grow their business. It will also provide Australian investors the ability to diversify into an asset class they currently have limited direct access to.

We will release a consultation paper this year to inform a legislative package that:

  • will significantly simplify disclosure requirements for large, listed corporates issuing directly to retail investors; and
  • enable parallel trading of simple corporate bonds in the wholesale and retail markets via a depository interests framework.

Early consultation on the policy design will allow the Government to strike an appropriate balance between increasing access to capital for Australian businesses while ensuring retail investors have access to the information they need to make informed investment decisions.

These changes would build on recent reforms to expand access to capital for Australian businesses.

In December 2014, the Government made changes to streamline disclosure requirements for companies wishing to issue 'simple' corporate bonds to retail investors.

This laid the legislative foundation for subsequent reforms that would enable retail investors to invest in corporate bonds issued in the wholesale market, via depository interests. Retail investors are currently able to invest in Commonwealth Government Securities via depository interests.

Separately, the Financial System Inquiry recommended further simplifying disclosure requirements.

The Government agreed to this recommendation and noted that it would work with the Australian Securities and Investments Commission and market participants to assess the need for further improvements to support the corporate bond market.

The Government has concluded that more can be done and announces today that we will release a consultation paper this year to inform further reforms.