The Government has asked the Council of Financial Regulators to prepare a report on the extent of exposures to derivatives by super funds. In announcing the finalisation of the portfolio holdings disclosure (PHD) regulations (see related TT article), Mr Frydenberg said it became apparent during consultation that some super funds have large exposures to derivatives.

Given that super funds are systemically important to the financial system, the Treasurer has asked the Council of Financial Regulators (CFR) to prepare a report on the extent and nature of the use of derivatives by super funds, drawing upon the information gathering powers of APRA and input across the CFR (including the Reserve Bank). [LTN 219, 12.11.21]

The Treasurer’s Media Release

In a major boost to superannuation transparency, Australians will have access to information about how superannuation funds are investing their money following the finalisation today of new regulations dealing with portfolio holdings disclosure by superannuation funds.

Under the requirements, superannuation funds must disclose information about the identity, value and weightings of their investments. Members will be able to clearly see how much of their retirement savings are being invested by superannuation funds across a range of asset classes and derivatives.

This information will make it easier for members to compare products and identify the most suitable fund for them.

Reviews of the superannuation system have found that superannuation portfolio disclosure is unduly opaque, does not meet global best practice and that requiring the disclosure of portfolio holdings would provide greater transparency and allow members to understand where their superannuation is invested.

Under the regulations, superannuation funds will be required to first report their holdings by 31 March 2022, with portfolio holdings disclosure to occur every six months thereafter. The Government will closely monitor these disclosures and consider further refinements where necessary.

While undertaking consultation on this measure, it has become apparent that some superannuation funds have large exposures to derivatives.

Given Australia’s superannuation funds have now become a systemically important part of our financial system, it is timely to ensure policymakers and regulators have a sound understanding of the extent and nature of the use of derivatives, and any implications for the operation of our financial system that could arise from these exposures.

The Treasurer has therefore asked the Council of Financial Regulators (CFR) to prepare a report on this matter, drawing upon the information gathering powers of the Australian Prudential Regulation Authority and the input of relevant experts from across the CFR, including the Reserve Bank of Australia.

[Tax Month – November 2021Previous 2021] 14.11.21

 

 

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