In a statement issued by ASIC, the mandatory central clearing regime will help to reduce risk in OTC derivatives markets.
ASIC commissioner Cathie Armour said: “This regime will help to reduce systemic risk in Australia by requiring key interest rate derivatives traded between the largest derivatives dealers to be centrally cleared.
“The rules have been designed taking into account the mandatory clearing requirements in other jurisdictions in which Australian financial institutions operate.
“We will work with overseas regulators to determine whether or not [equivalent] or substituted compliance treatment is available as this will assist Australian financial institutions [to] manage implementation of the regime,” she said.
The regime applies to transactions in OTC interest rate derivatives denominated in Australian dollars, US dollars, euros, British pounds and Japanese yen between OTC derivatives dealers.
“The derivative transaction rules (clearing) set out which entities and derivative contracts are covered by the clearing mandate, the eligible central counterparties that may be used, alternative clearing (allowing entities to comply with certain overseas clearing requirements) and certain exemptions from the clearing mandate,” the statement said.
The final derivatives transaction rules follow ASIC's consultation earlier in the year. The clearing obligations will commence in April 2016.
