16 March 2016
Media Release - #232016, 2016

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Financial System Resilience Bill

Minister for Small Business and Assistant Treasurer Kelly O'Dwyer today introduced to Parliament a Bill to make Australia's financial system more resilient and ensure our financial institutions can continue to participate in global capital markets.

"The Financial System Legislation Amendment (Resilience and Collateral Protection) Bill 2016 delivers on Australia's G20, post-GFC commitment, to address systemic risks associated with trade in over-the-counter (OTC) derivatives," Minister O'Dwyer said.

"It also delivers on the Government's commitment to 'clarify domestic regulation to support globally coordinated policy efforts, and facilitate the ongoing participation of Australian entities in international capital markets,' in response to the Financial System Inquiry.

"The Bill will ensure that - like financial institutions in the US, Europe and Japan - Australian businesses will be ready and able to comply with international margin requirements for non-centrally cleared derivatives, due to be phased in from September 2016.

"Requiring institutions to provide margin (collateral to cover the costs of default on a trade) will reduce the potential impact of counterparty default on financial institutions and the broader financial system; making it more stable and resilient.

"The Bill is deregulatory and facilitative in nature. It allows Australian institutions to comply with international requirements and any corresponding prudential standards set by the Australian Prudential Regulation Authority (APRA).

"The Bill has been developed in consultation with APRA, the Reserve Bank of Australia (RBA), the Australian Securities and Investments Commission (ASIC), and industry stakeholders.

"The Bill will allow Australia to maintain its position as a regional financial centre with a robust and efficient regulatory framework," Minister O'Dwyer said.