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Delay over-the-counter regime by 12 months: FSC
The Financial Services Council (FSC) has called for a 12-month transition period for the implementation of a trade reporting regime for over-the-counter (OTC) derivatives in Australia.
In a submission to Treasury relating to Australia's commitments to the G20 about the reporting and clearing of OTC derivatives, the FSC said the Australian regime must have: global comparability; the "capacity for global equivalence and mutual recognition"; and "integrity, cost-effectiveness, efficiency [and] sufficient liquidity".
The FSC suggested a 12-month transition period, given that the "lack of clarity and concurrent finalising of rules alongside implementation in the US of the [Commodity Futures Trading Commission] swap dealer requirements has caused significant issues - not only for Australian swap dealers, but entities globally".
The submission also called for "internal coordination" whereby Australian regulators "engage fully with foreign regulators that are also moving to implement G20 commitments on OTC derivatives reform".
"This will help ensure harmonisation and avoid unnecessary duplication," said the submission.
The FSC also called for a one-hour delay in the public disclosure of trades in order for an "orderly lay off to occur, since the disclosure of large trades would have the potential to "move the market".
"If these trades are publicly disclosed before the 'laying off' or 'closing out' occurs, the disclosure will affect market pricing to the ultimate disadvantage of the original trader, with little discernible benefit for the market or investors," said the submission.
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