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APRA finalises its cross-industry amendments to margin requirements

Thursday 19 September 2019

The Australian Prudential Regulation Authority (APRA) has released its response to submissions on amendments to its margin requirements for non-centrally cleared derivatives.

The changes to Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives (CPS 226) will apply to all authorised deposit-taking institutions, general insurers, life insurers and registrable superannuation entity licensees.

APRA is proceeding with its revisions to accommodate the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions' (IOSCO) decision to delay the final implementation phase for margin requirements by one year to 1 September 2021. APRA has also made other amendments in response to clarifications made by the BCBS and IOSCO.

APRA will add the UK’s Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) to the list of foreign bodies eligible for substituted compliance with APRA’s margin requirements in CPS 226, provided that the PRA and FCA’s margin requirements remain substantially unchanged following Brexit.

Copies of the response letter and final revised standard can be found on the APRA website at: Margining and risk mitigation for non-centrally cleared derivatives.

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.