Regulators echo calls for central clearing
Australia’s financial regulators have joined forces to back central clearing on dealer-traded derivatives.
The recommendation, made by the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA), follows long discussions about how to mitigate risk in over-the-counter (OTC) derivative markets while keeping the regulation cost low.
In a submission to Treasury, the regulators called for the central clearing mandate on trades between internationally-active dealers, with the exclusion of North American, European and Japanese-referenced credit index derivatives.
They said the cost of the process, which would see OTC derivative transactions approved through a central registry, would be “very low”.
The regulators said they did not see the need to implement a central clearing function on non-dealers at this time, particularly those with high liquidity.
The matter was raised by the regulators mid-last year and followed concerns about transparency and derivative market efficiency in a post-global financial crisis environment.
Recommended for you
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
