Minister for Finance Mathias Cormann said the government is seeking stakeholder feedback to combine this proposal with an earlier proposal to introduce a “central clearing mandate” for interest rate derivatives “denominated in four global currencies”.
“The government is committed to ensuring that our financial markets are regulated at an appropriately high standard,” Mr Cormann said.
“Introducing central clearing of over-the-counter derivatives offers considerable financial stability benefits through better default risk management,” he said.
Mr Cormann said internationally active dealers already clear most new transactions in Australian dollar interest rate derivatives.
“The additional costs imposed by this measure are expected to be very low,” Mr Cormann said.
“This proposed combination of central clearing mandates will further strengthen the case that Australia’s over-the-counter derivatives regime is substantially equivalent to those in overseas jurisdictions.
“This may lead to further relief being provided to Australian businesses operating in those markets from burdensome foreign regulations,” he said.
The deadline for submissions is 1 August 2014.
