SYDNEY, Feb 21 (Reuters) - Australia’s corporate watchdog said it is investigating share trading in buy-now, pay-later lending companies that occurred following the release of a confidential report to lawmakers with potential implications for regulation of the sector.
Shares in Australia’s biggest buy-now, pay-later company Afterpay Touch Group fell 10.6 percent to A$16.90 on Wednesday morning after a report on possible regulatory changes was handed to senators ahead of its public release due Feb. 22.
The lawmakers have been investigating whether payday lenders and pay-later companies, which offer immediate credit with little or no checks, should abide by the same laws that force banks to lend responsibly.
Shares in Zip Co., a credit card and digital payment merchant provider, and Flexigroup, a leasing and factoring company, also fell on Wednesday morning in the absence of market-moving news.
Australian Securities and Investments Commission (ASIC) executive Cathie Armour said the regulator was looking into the trades.
“The volatility at the particular time was a concern to us and so we will be following that up,” she told the Senate committee handling the inquiry late on Wednesday.
“There wasn’t a general announcement preceding those drops that would have potentially been an explanation so we ... do need to follow up.”
The Senate investigation, known as the “pay-day inquiry”, could have huge ramifications for the fledgling sector if it leads to such lenders being regulated like traditional banks.
Shares in Afterpay had been rising steadily in recent months due to growing domestic sales and ambitious plans to ramp up operations in the U.S. market.
Spokespeople from Afterpay and Zip Co declined to comment, while Media representatives from Flexigroup did not return an email seeking comment.
Reporting by Paulina Duran; Editing by Stephen Coates