RBA releases derivatives review

30 Oct 2012, 1:31 pm   -   Source: AAP
The Reserve Bank of Australia released a joint review of the over the counter derivatives market. (AAP)

The Reserve Bank of Australia released a joint review of the over the counter derivatives market. (AAP)

The Reserve Bank of Australia and the Australian Prudential Regulation Authority have released a review of the over-the-counter derivatives market.

A joint review by Australia's central bank and other financial regulators has recommended tighter rules for trading of over-the-counter (OTC) derivatives.

OTC derivatives, contracts traded between two parties directly,have been under scrutiny by the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA).

On Tuesday, APRA and the RBA announced the results of their joint review of the OTC derivatives market, based on a survey of market participants in July.

The review has recommended a more centralised approach to the rules governing derivatives trading, although it acknowledges that this could be less suitable for some participants.

It also suggested a mandatory trade reporting obligation for OTC derivatives to be adopted by the federal government, a central clearing of Australian dollar-denominated OTC interest rate derivatives by larger market participants.

It added that further improvements could be made to support operational and risk-management practice in the market, particularly relating to non-centrally cleared transactions.

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