In 2024, the Council of Financial Regulators (CFR) conducted a public consultation on the case for central clearing of bonds and repurchase agreements (repos) in Australia. The consultation sought views from respondents on a range of related issues including:
(i) the costs and benefits of central clearing in these markets;
(ii) market functioning and financial stability considerations; and
(iii) issues related to a prospective service being provided from overseas.
The ASF submitted its
own response on 13 September 2024.
On 14 March, the CFR released
a response to its public consultation. While the CFR agrees that the establishment of central clearing of bonds and repos in Australia has the potential to enhance the efficiency, stability and transparency of these markets, the relative costs and benefits of the service offering is a critical factor to be assessed.
The CFR has encouraged a co-ordinated approach by the industry and prospective operators if the consensus is that the benefits outweigh the challenges and costs. However, the CFR does not consider there to be a compelling case for regulatory intervention to require central clearing in these markets at this time. Accordingly, the CFR is not considering the introduction of a clearing mandate.