On 5 June 2015 Treasury released the second draft of the
regulations relating to OTC derivatives under the Financial Markets
Act, 2012 (the "Draft Regulations"). At
the same time, the FSB released a number of draft notices,
including a notice relating to margin for non-centrally cleared OTC
derivatives (the "Draft Margin Notice").
A stated aim of the new regulatory regime for OTC derivatives is to
reduce the systemic risk associated with derivatives. The deadline
for comment on the various documents was 6 July 2015.
A number of key concerns with the Draft Regulations and Draft
Margin Notice are highlighted below.
Corporates and non-bank participants should
note: The Draft Regulations and Draft Margin Notice do not
exclude transactions among affiliates from the need to centrally
clear or post margin for OTC derivatives. As a result, a central
treasury company of a group could find itself being required to
become an authorised OTC derivatives provider in South
