Report on the Australian OTC Derivatives Market – November 2015

The Reserve Bank of Australia, Australian Prudential Regulation Authority, and Australian Securities and Investments Commission (the Regulators) are today releasing their fourth Report on the Australian OTC Derivatives Market – November 2015.

This report constitutes the latest advice from the Regulators to the Minister on over-the-counter (OTC) derivatives reforms, and in particular mandatory requirements for central clearing, platform trading and trade reporting of OTC derivatives.

Based on an assessment of current activity and practices in the Australian OTC derivatives market and overseas developments, the Regulators do not see a case for extending the product scope of the Australian central clearing mandate at this time.

The Regulators see in-principle benefits from increased use of trading platforms and will continue to consider the case for promoting the use of trading platforms, including by introducing a trading mandate. While the Regulators are not making specific recommendations on a mandatory trading obligation, the Report sets out the details of how the Regulators will assess the case for introducing trading mandates in the future.

The Report also notes that Australia intends to implement internationally-agreed margin requirements and other risk mitigation requirements for non-centrally cleared derivatives in its regulatory regime. In the first instance, this will be through APRA's prudential standards, given the prominent role of APRA-regulated institutions in the Australian OTC derivatives market. The Regulators will consider their approach for non-APRA regulated institutions in 2016.