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Government consults on OTC derivatives

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By Reporter
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2 minute read

The Coalition has followed through on the previous government’s G20 commitment to reform Australia’s over-the-counter (OTC) derivatives market.

The Assistant Treasurer Arthur Sinodinos announced the release of a proposals paper canvassing the introduction of a limited obligation for central clearing of certain OTC derivatives yesterday.

The Labor government made three key commitments relating to the regulation of OTC derivatives at the 2009 G20 Summit in Pittsburgh.

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The commitments included the requirement that all OTC derivatives be reported to central registries; that they be cleared through central counterparties; and that they be executed on electronic trading platforms where appropriate.

The proposals paper released yesterday is based on a joint report by ASIC, APRA and the RBA, released in July 2013 titled Report on the Australian OTC Derivatives Market.

Mr Sinodinos said the government is also seeking to make the end-user exemption from trade reporting permanent.

“This is an important next step in implementing the Australian government’s commitments with respect to the reforms agreed by the G20 to improve the transparency and resilience of global OTC derivatives markets,” he said.

“The limited clearing obligation proposed in the paper follows similar moves in key overseas markets such as the United States and the European Union. It is expected to assist in gaining further concessions from overseas regulators for Australian banks raising funds and hedging risks in these markets,” said Mr Sinodinos.

Submissions to the proposals paper close on April 10.

Government consults on OTC derivatives

The Coalition has followed through on the previous government’s G20 commitment to reform Australia’s over-the-counter (OTC) derivatives market.

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