Pru Bennett

As part of its analysis of gender diversity and policies in Australia’s largest listed companies, BlackRock has also reviewed the guidelines of the organisations that advise large institutions including superannuation funds on how they should respond to proposed board resolutions.

BlackRock’s research has found three of the most widely-used proxy advisors in Australia – CGI Glass Lewis, ISS Governance and Ownership Matters – have now disclosed that diversity is an issue and would consider changing their recommendations to achieve diversity.

In all, 18% of ASX200 companies have no gender diversity on their boards – 38% of companies without any gender diversity on their boards are from the resources industry.

Pru Bennett, BlackRock’s Corporate Governance and Responsible Investment Director – Head of Asia Pacific, said: “Proxy advisors give recommendations to a broad array of institutions, including those representing superannuation funds.

“These proxy advisors are now strengthening their stand on achieving diversity. For example, CGI Glass Lewis has said it will consider recommending voting against the chair of the nomination committee, or the equivalent, at the company’s AGM if a company’s record on diversity is poor.

“The Australian Council of Superannuation Investors (ACSI) also refers to diversity in the discussion of core principles of board composition in their guidelines.

“Our conclusion is that gender diversity can have clear positive ramifications for return on investment over the medium- to long-term. However, some investment is required, backed by clearly detailed and implemented policies, to kick start gender diversity’s virtuous circle.

“Unfortunately, our research says policies and reporting surrounding gender diversity among ASX 200 companies remain piecemeal.

“The majority of companies are also still applying a largely minimal standard mindset to the reporting of their diversity obligations.

“In the three years since our first report on diversity in Australia’s 200 largest listed companies, there has been some improvement but there is scope for more.”

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S&P/ASX 200 VIX available in real-time

From 28 February, Australia’s equity market volatility benchmark, the S&P/ASX 200 VIX (VIX), will be made available in real-time.

This will provide the market with intra-day volatility information and importantly, enables ASX to create derivative products for hedging and trading the volatility asset class.

The real-time S&P/ASX 200 VIX will replace the current end-of-day VIX index by using the real-time bid/ask prices of S&P/ASX 200 index options to calculate the VIX index value.

The VIX is a tool for investors, financial media, researchers and economists to monitor the level of near-term volatility in the Australian benchmark equity index. The level of the VIX implies market expectations of volatility in the S&P/ASX 200 over the next 30 days and provides an indicator of investor sentiment.

ASX Deputy CEO Peter Hiom said: “Over the past few years of global economic uncertainty, volatility has emerged as an asset class in its own right. As a consequence, we have seen the global development of derivatives products that can hedge, trade and diversify investment portfolios against volatility.

“In Australia, customer appetite for derivative products over the VIX has grown since the launch of the end-of-day VIX index in 2010. The real-time VIX is an important pre-requisite for ASX to launch VIX futures, which we are on track to deliver towards the second half of this calendar year.”

“The real-time S&P/ASX 200 VIX constitutes an exciting step forward in the development of the Australian financial services industry,” said Guy Maguire, Head of S&P Dow Jones Indices in Australia. “The Index will allow Australian investors to gauge equity market volatility, while also serving as the basis for future investment products.”

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