The Australian Stock Exchange, which with ASIC acts as a corporate regulator says it intends to monitor portfolio and mutual fund managers closely, as it seeks to stamp out the practice of window dressing.

Window dressing typically occurs at the end of the financial year and is a deliberate strategy managers engage in of price manipulation which dresses up the performance of the portfolio or fund before presenting the performance to clients or unit holders.

Belinda Gibson, deputy chairwoman of the Australian Securities & Investments Commission (ASIC) says that the practice of window dressing distorts the value of a portfolio at a time when it benefits the manager, at the expense of current and potential investors.

“Investors may not only be looking at their funds performance through rose-coloured glasses — they may also be paying higher performance fees than are necessary,” Ms Gibson said in a statement yesterday.

The regulator is poised to take over responsibility of supervising real time trading on licensed exchanges.

Ms. Gibson added that brokers and other indirect market participants should view clients who place their orders close to the end of business on 30th June with some suspicion that they intend to try to set the closing price for the security higher than it otherwise would be.

ASIC and ASX surveillance teams would be monitoring end of financial year trading and exchanging notes, she said.