ASX Aware Letters and Market Volatility Roundtable

ASX aware letters in a volatile market: insights for investor relations AIRA recently convened a Chatham House Rule roundtable with senior investor relations (IR) practitioners and ASX Compliance to examine how aware letters, including earnings surprise letters, are operating in today’s more volatile and data-intensive market. The discussion revealed a shared commitment to disclosure integrity, as well as real-world tensions that issuers are managing under heightened scrutiny.

The issuer perspective: operating under a sharper spotlight Many participants reported a strong perception that aware letters are becoming more frequent around reporting seasons. Even where underlying statistics may show only modest changes year-on-year, the combination of visible letters, high-profile enforcement activity and extensive media attention is contributing to a sense that the disclosure environment has become more demanding. ASX Aware Letters and Market Volatility Roundtable White Paper - December 2025 2 For IR teams, this means additional regulatory touchpoints at precisely the time when internal pressure is already elevated. Letters typically trigger escalation to boards and executive teams, even if the issue is ultimately resolved without any finding of breach.

The process itself consumes governance bandwidth. There was also concern about reputational risk when aware letters and responses are published. Once a letter appears on the public record, some stakeholders may infer wrongdoing or serious suspicion, regardless of the actual conclusion. Boards and management can become anxious, and the publication of correspondence may itself contribute to further share price volatility if it is interpreted as a negative signal. Volatility, consensus and the challenges of interpretation Participants highlighted a structural shift in how the market forms expectations. Investors and analysts are increasingly focused on granular outcomes, such as performance by region, product, segment or pro-forma measure, rather than only headline earnings. At the same time, trading behaviour is influenced by algorithmic and quantitative strategies that react quickly to surprises, sometimes at a level of detail that management does not regard as individually material. In this environment, relatively small variances in line items can trigger large price moves.

Issuers can find it difficult to determine whether a price movement reflects genuinely new information or simply a sharp reinterpretation of information that was already in the public domain. Third-party consensus platforms add another layer of complexity. Concerns were raised about inconsistent mapping of analyst models to platform line items, gaps or partial population of fields, and misclassification of one-off or pro-forma items. These issues can generate apparent “surprises” that do not align with the company’s own performance trajectory or internal expectations, but which may still lead to significant price reactions and regulatory queries. The timing dilemma: early versus complete disclosure A recurring theme was the tension between early disclosure and complete disclosure. On the one hand, disclosing partial information as soon as it emerges can prolong market uncertainty if the full context is not yet available.

On the other hand, waiting for a more complete picture carries risk if the information is later regarded as price-sensitive at an earlier point in time. This dilemma is most acute where performance is moving quickly, where outcomes are finely balanced around guidance ranges, or where materiality depends on how the market will interpret a combination of factors rather than a single data point. Some issuers see merit in publishing a “company view” of consensus to anchor expectations and reduce reliance on flawed datasets. However, legal and practical advice frequently discourages this approach, given concerns about potential liability, the need to treat analysts fairly, and the ongoing effort required to maintain accuracy. ASX Aware Letters and Market Volatility Roundtable White Paper - December 2025 3 How aware letters are positioned by the exchange From the exchange’s perspective, aware letters are described as a market integrity tool designed to test whether a company may have been aware of price-sensitive information earlier than it disclosed, particularly when a share price move cannot readily be explained by public information.

They are framed as a fact-finding mechanism, not as a sanction in their own right. Letters are not typically issued where the cause of a price move is clearly evident from announcements or publicly available data. Where there is genuine uncertainty about whether an issuer could have been aware of undisclosed price-sensitive information, the exchange will move quickly to seek clarification. There is no suggestion of a target volume or quota. Issuance is driven by market data triggers and an assessment of disclosure risk. In recognition of a more volatile backdrop, the earnings surprise trigger threshold has effectively shifted in recent periods. The focus has moved from relatively modest close-toclose movements to larger share price moves, around 10 per cent or more on results day in many cases. This is intended to reduce “false positives” that would otherwise arise in an environment of structurally higher volatility. The methodology for assessing price moves, including the one-day close-to-close approach, is also under review, with any changes needing to be simple, consistent and operationally workable. Publication of aware letters and responses is justified as part of a transparent and evenhanded oversight framework.

The rationale is that if questions are being asked about disclosure integrity, the market should be able to see that those questions have been asked and answered. Publication is not intended to signal a breach. Rather, aware letters are presented as part of the normal supervisory architecture of a real-time market. Guidance, consensus and the role of process A clear distinction was drawn between missing a company’s own published guidance and missing external consensus. Failing to update the market when performance moves materially away from guidance is regarded as higher risk and more likely to attract regulatory concern than an outcome that diverges from third-party consensus in circumstances where guidance has not been issued or has been met. At the same time, companies are expected to monitor performance against known expectations, including a defensible view of consensus where it is relevant. This does not mean adopting any single vendor dataset uncritically. Rather, it means having an internal framework for understanding what the market broadly expects and how performance is tracking relative to that reference point.

The importance of robust internal processes and documentation is emphasised. Companies are expected to be able to demonstrate when potential variances were first identified, how materiality was assessed over time, which governance forums were involved, and why particular decisions about disclosure timing were reasonable based on the information available at each point. ASX Aware Letters and Market Volatility Roundtable White Paper - December 2025 4 A clear, contemporaneous decision trail strengthens an issuer’s overall compliance posture. It can be decisive in responding to aware letters and is valuable if questions are raised later by regulators, auditors, boards or other stakeholders. Practical takeaways for AIRA members The roundtable surfaced several practical implications for IR teams:

• Expect more queries in volatile markets. Even in well-managed disclosure environments, sharp price moves and granular expectations mean that queries, including aware letters, are likely to remain a feature of reporting seasons.

• Treat guidance as the primary anchor. Where guidance has been set, close and ongoing monitoring against it is essential. If performance moves materially, early internal escalation and, where appropriate, timely market updates remain critical.

• Define an internal view of consensus. Agree on a consistent method for what consensus means for your organisation, how third-party datasets are used and tested, and how that view feeds into real-time monitoring and board reporting.

• Prioritise documentation. Record key judgements as conditions evolve, rather than reconstructing the narrative after results. Short, contemporaneous notes of discussions and decisions can be highly valuable.

• Prepare for publication optics. Assume that aware letters and responses may be published. Build an internal and, where necessary, external communication plan so that boards, executives and frontline spokespeople understand the context and the process.

• Account for data limitations in engagement. Recognise that consensus platforms and other datasets can distort expectations. Use investor engagement to explain your performance drivers, clarify how you think about guidance, and address known anomalies in external numbers where appropriate.

Looking ahead Aware letters remain a core element of the exchange’s disclosure assurance framework, particularly during periods of heightened volatility. Issuers broadly support the underlying objective of promoting timely, fair and well-understood disclosure. At the same time, they face genuine operational and reputational challenges created by rapid market reactions, dependence on granular and sometimes imperfect data, and the public visibility of regulatory correspondence. AIRA will continue to engage with the exchange and with members on these themes.

Areas of ongoing focus include improving market understanding of how aware letters operate, refining approaches to volatility and consensus in assessing disclosure expectations, and reducing unintended consequences for compliant issuers that are striving to do the right thing in a complex environment.

ASX Aware Letters and Market Volatility Roundtable White Paper - December 2025