ASIC consults on retail OTC derivatives

On 9 May 2011, ASIC  released a consultation paper on the financial requirements for issuers of over-the-counter (OTC) derivatives, such as contracts for difference or margin foreign exchange, to retail investors.

Consultation Paper 156: Retail OTC derivative issuers: Financial requirements (CP 156) seeks feedback on:

• requiring issuers to create rolling 12-month cash flow projections,
• removing the current requirements to hold surplus liquid funds (SLF) and adjusted surplus liquid funds (ASLF) and replacing these with a requirement to hold net tangible assets (NTA) of at least the greater of $1 million or 10% of average revenue,
• specifying the net tangible asset (NTA) liquidity requirements for issuers,
• introducing a reporting framework concerning the level of NTA held by issuers, and
• a staged implementation process.

ASIC is seeking comments

by 4 July 2011

Further details can be found here.