Regulation Impact Statement Updates

Official website for publishing regulatory impact analysis information for regulatory decisions announced by the Australian Government, COAG and COAG Councils.

Central Clearing of Prescribed Interest Rate Derivatives

Aust Gov
25th May 2016

Regulation Impact Statement – Department of the Treasury

On 8 September 2015, the Government amended the Corporations Regulations 2001 to implement a central clearing mandate for OTC interest rate derivatives denominated in Australian dollars and four global currencies (US dollars, euros, Japanese yen and British pounds), limited to transactions between internationally active dealers. The Government’s reforms form part of a coordinated effort by G20 jurisdictions to improve transparency and risk management in these markets.

In the absence of Australian regulation, Australian banks and businesses participating in these markets could otherwise be required to comply with central clearing mandates imposed by other jurisdictions, such as the US and the EU. Through an approach known as substituted compliance, foreign regulators may grant relief from their own regulatory requirements if a foreign entity is subject to equivalent requirements in their home jurisdiction.

A Regulation Impact Statement (RIS) was prepared by the Department of the Treasury and assessed as compliant and consistent with best practice by the Office of Best Practice Regulation (OBPR).

The RIS estimates the average annual regulatory saving at $6.73 million per annum. The OBPR has agreed to the regulatory saving.

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