CAMAC's conclusions are a welcome endorsement of
Australia's existing regulatory regime for
In November 2010, the Australian Government commissioned the
Corporations and Markets Advisory Committee
(CAMAC) to review the existing Australian
regulatory regime for derivatives and consider the appropriateness
of the regime in today's economic environment. CAMAC was also
asked to examine the definition of "derivative" in the
Corporations Act and consider whether it should be amended to
reduce the complexity of the law in this area.
Following consultation with a number of industry participants,
CAMAC released its report on 24 January 2012.
The report contains a useful overview of the existing regulatory
framework for derivatives under the Corporations Act,
the classification of a derivative as a financial product for
the purposes of Chapter 7 of the Corporations Act; and
the application of the financial services licensing and
disclosure regime to persons that deal in derivatives and the
availability of exceptions under the regime.
CAMAC concluded that the existing regulatory framework under the
Corporations Act is appropriate to regulate the Australian
derivatives markets and that there are no fundamental problems that
would warrant the need for immediate change.
Following a review of existing case law on the meaning of
"derivative" under the Corporations Act, CAMAC also
concluded that the definition of derivative was not unduly complex.
Although recognising that the definition was very broad, CAMAC
observed that this was intentional to ensure that the definition
was sufficiently flexible to capture new or innovative products.
Any unintended consequences of a broad definition could be
addressed by making regulations to exclude certain things from the
definition of derivative rather than to embark on a re-write of the
Overall, CAMAC's conclusions are a welcome endorsement of
Australia's existing regulatory regime for derivatives.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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