Over the past year, the Council of Financial Regulators, the coordinating body for Australia's main financial regulatory agencies including ASIC, APRA and the RBA, has progressed on a number of G-20 regulatory initiatives, Mr Edey said. These include the implementation of Basel III capital requirements in Australia and the regulation of OTC derivatives markets.
As part of OTC derivatives reforms, the Federal Treasury in April proposed a legislative framework for implementing Australia's G-20 commitments.
That framework provides for clearing of OTC derivatives through central counterparties (CCPs), mandatory reporting of OTC derivatives through trading repositories and executing standardised OTC derivatives on exchanges or electronic trading platforms.
While G-20 leaders three years ago had aimed to have OTC derivatives cleared through CCPs by the end of 2012 at the latest, there are still many regulatory details that needed to be decided, Mr Edey said.
"Our work is far from done. While the Council's direction is clear and the legislative process underpinning the framework is well underway, there remains a fair amount of work ahead to complete the transition; for market participants, infrastructure providers, and regulators alike," he said at the International Swaps and Derivatives Association (ISDA) Conference in Sydney on Thursday.
In terms of mandatory trade reporting obligations, these are still some time off being implemented in Australia.
"Given the timeframes required to consult on and pass the relevant legislation, it could be some months before a definite move towards mandatory reporting obligations could be made. As a result, it could be well into next year before any mandate is actually in force."
In terms of central clearing, Treasury proposed an initial "wait and see" approach to allow market forces to provide the initial impetus for parties to migrate to CCPs, rather than immediately mandating for this.
Eddy said while international banks and large domestic banks had already begun making the transition to more transparent derivatives trading, partly in response to regulatory reforms already underway in other jurisdictions, smaller local institutions were lagging behind in implementing central clearing.
"It is evident that in the absence of similar pressures, smaller and more domestically focused institutions are generally at an earlier stage in this process.
Given the complexity of the required adjustment, these institutions are encouraged to accelerate their transition plans."
