Approximately A$900 billion of open derivatives positions are held by Australian superannuation funds, according to the Reserve Bank of Australia (RBA). The International Swaps and Derivatives Association (ISDA) has highlighted that these funds are making more frequent use of derivatives as a cost-effective and efficient way to manage their foreign currency and investment exposures. With these derivative trades there usually also comes some ASIC trade reporting requirements.
How are Australian Superannuation funds currently using derivatives?
Due to the limited size of the domestic investment market and a rising proportion of offshore assets, Australian super funds are increasingly using derivatives to manage currency and investment risks. In fact, ISDA notes that the value of super funds under management ($4.1 trillion) has outgrown the total market capitalisation of all companies listed on the Australian Stock Exchange ($3 trillion). Accordingly, they are not only investing in
