CAMAC has published a report on Derivatives.

The report responds to a request from the Government for advice on the suitability of the legislative definition of derivative for today’s derivatives markets and whether it may be possible to decrease complexity in this area of the law.

CAMAC concluded that the current definition in section 761D Corporations Act suitably aligns with market and regulatory perceptions of what constitutes a derivative and that no changes to the definition, or amendments in light of approaches adopted by overseas jurisdictions to the definition of derivative, are needed. The definition is meant to be broad, to allow for its application to new derivative products without disruption to the regulatory structure of derivatives markets.

CAMAC also considers that the section 761D definition of derivative is not unduly complex.

In CAMAC’s view, Australian derivatives markets are appropriately regulated through the general licensing and disclosure requirements applicable to all financial products, including derivatives, as well as the provisions specifically tailored for derivatives.