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Law of Derivatives: An International Comparison

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Corporations and Markets Advisory Committee
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This report was produced by the Corporations and Markets Advisory Committee. View further information about the Committee and it's other publications.

At the time of its release the Advisory Committee was currently reviewing the law and practice relating to exchange-traded and off-market (OTC) derivatives. This review was prompted by the rapid growth in volume and complexity of the Australian derivatives market and comparable overseas markets. The Advisory Committee's task was to ensure appropriate protection for participants in Australia while encouraging the benefits of a free, innovative and internationally competitive Australian derivatives market.

This Paper was the first step in the Committee's review. It

  • identifies which derivatives are regulated by the Corporations Law
  • outlines the key features of how the Corporations Law applies to regulated derivatives
  • examines how derivatives are regulated in the United Kingdom, Canada and the United States and outlines some reform proposals in those jurisdictions.

The Advisory Committee considers that an international comparison is essential. Derivatives are traded globally and any change to Australian law needs to take proper account of overseas regulation. This will help to ensure that any changes do not unnecessarily place the Australian market at a competitive disadvantage.

The Advisory Committee plans to issue a Discussion Paper later in 1995 outlining specific issues and proposals for reform. In developing its proposals, the Committee will have close regard to the law and developments in overseas jurisdictions.