APRA, ASIC and the Reserve Bank of Australia have released a joint report on the Australian OTC Derivatives Market. This report reviews the risk management practices of market participants in domestic over-the-counter (OTC) derivatives market. A particular focus of the report is how market participants are using centralised infrastructure, and the prospects for increased usage.
The main recommendations of the report are that:
- the Australian Government consider a broad-based mandatory trade reporting obligation for OTC derivatives;
- central clearing of Australian dollar-denominated OTC interest rate derivatives should be adopted by larger market participants, and that this should be a mandatory obligation if the existing industry-led migration stalls; and
- there is scope for further improvements to operational and risk-management practices in relation to non-centrally cleared transactions.
A copy of the report is available here.