Australia proposes central clearing of bonds and repos

Financial regulators are inviting feedback to reassess its possible implementation. 

Australia’s financial regulators are inviting feedback to reassess the idea for a central clearing of bonds and repos.

In a press release, the Reserve Bank of Australia (RBA) as well as the Council of Financial Regulators (CFR) noted “considerable changes” in the size and structure of the country’s bond and repo markets in recent years. 

Recent analysis by the RBA staff reportedly indicated that the potential benefits of central clearing in these markets has increased, and that the case for central clearing may be stronger than previously assessed by the RBA in 2015.

In line with this, the CFR has released a consultation paper and is seeking feedback regarding any costs and benefits that may accrue from the introduction of a CCP in the Australian bond and repo markets. 

The CFR also seeks to understand the circumstances under which a bond and repo CCP could be operated safely and efficiently by an overseas operator; and what additional protections may be required in such a scenario.

Interested parties may submit issues raised in the consultation paper on or before 4 September. Submissions can be sent to CSSubmissions@rba.gov.au.