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Regulation of On-exchange and OTC Derivatives Markets

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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.

The Advisory Committee commenced its review of on-exchange and off-exchange (OTC) derivatives in mid-1994, following the release of the Australian Securities Commission (ASC) Report on Over-the-Counter Derivatives Markets in May 1994.

To assist the review, the Advisory Committee established an expert derivatives Panel drawn from the Sydney Futures Exchange (SFE), the Australian Stock Exchange (ASX), the ASC, the Reserve Bank of Australia (RBA), banks and merchant banks, representatives of professional associations, lawyers, accountants and academics. The Panel met on various occasions to discuss matters related to on-exchange and over-the-counter (OTC) derivatives. In preparing this Report, the Advisory Committee closely considered the range of views expressed by Panel members at those meetings. However, the recommendations in this Final Report are those of the Advisory Committee only.

As part of its review of derivatives, the Advisory Committee appointed a separate specialist Netting Sub-Committee to review and make recommendations on the law concerning netting of derivatives and other financial market transactions. This Sub-Committee consisted of experts from private practice, the exchanges and industry organisations. The Advisory Committee wishes to acknowledge and thank Bob Austin, Convenor of the Sub-Committee, and the other members of the Sub-Committee for the considerable time and effort that they devoted to preparing the Report on netting and the Netting Background Paper. The Final CASAC Netting Sub-Committee Report (Netting in Financial Markets Transactions (June 1997)) is separately published under the auspices of the Advisory Committee, in conjunction with this Final Report.

In this Final Report, the Advisory Committee puts forward 50 Recommendations for the future operation of on-exchange and OTC derivatives markets.