pc
nid 94425
Aug 05, 2026
kgurnani@vixio.com
Australia
Federal Register of Legislation
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1713 charsAustralia's Australian Securities and Investments Commission Declares Financial Requirements for Retail Over-the-Counter Derivatives Issuers
On July 7, 2026, the Australian Securities and Investments Commission (ASIC) issued the ASIC Corporations (Financial Requirements for Issuers of Retail OTC Derivatives) Instrument 2022/705 under authority of the Corporations Act 2001. This legislative instrument establishes financial resource requirements applicable to issuers of retail over-the-counter (OTC) derivatives in Australia.
The instrument declares what constitutes adequate financial resources for entities issuing retail OTC derivatives to Australian consumers. This requirement forms part of ASIC's regulatory framework designed to protect retail investors engaging in OTC derivatives markets by ensuring that derivative issuers maintain sufficient financial capacity to meet their obligations. The instrument is administered by the Department of the Treasury and operates under the Corporations Act 2001 framework.
The legislative instrument came into force on July 7, 2026, and supersedes previous arrangements through its repeal provisions. Entities issuing retail OTC derivatives must ensure compliance with the financial resource requirements specified in the instrument. Market participants and derivative issuers should review the full legislative text to understand their specific obligations regarding financial adequacy and resource maintenance. The instrument is available on the Federal Register of Legislation and includes detailed definitions and preliminary provisions outlining the scope and application of the financial requirements.
REFERENCES:
Federal Register of Legislation. ASIC Corporations (Financial Requirements for Issuers of Retail OTC Derivatives) Instrument 2022/705. Available at: https://www.legislation.gov.au/
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1814 charsAustralian Securities and Investments Commission Declares Financial Requirements for Retail Over-the-Counter Derivatives Issuers
On July 7, 2026, the Australian Securities and Investments Commission (ASIC) issued the ASIC Corporations (Financial Requirements for Issuers of Retail OTC Derivatives) Instrument 2022/705 under authority of the Corporations Act 2001 .
This instrument imposes minimum capital, liquidity, financial-monitoring and reporting requirements on Australian financial services licence holders that issue over-the-counter derivatives to retail clients. This is largely a remake of the earlier ASIC Class Order CO 12/752 without significant substantive changes.
Principal requirements include:
Cash-flow forecasting: Each March, June, September and December, the licensee must prepare a cash-flow projection covering at least the next 12 months. The projections must:
Use reasonable revenue and expense estimates.
Be approved and certified in writing by the directors or other governing persons.
Document the calculations and assumptions.
Be updated where there are signs that the financial requirements may not be met.
Be provided to ASIC when requested.
2. Net tangible assets (NTA): The licensee must continuously maintain net tangible assets equal to at least the greater of A$1 million or 10% of its average revenue.
3. Liquidity: At all times, the licensee must hold cash or cash equivalents equal to at least 50% of its required NTA and liquid assets equal to at least 50% of its required NTA. Client money or assets held to satisfy obligations to clients cannot be counted towards these requirements.
4. Annual reporting: The licensee must submit to ASIC an annual statement setting out its year-end NTA and how it was calculated and an annual audit opinion from a registered company auditor covering compliance with the financial and cash-flow requirements.
The instrument comes into effect immediately.