The introduction of risk standards for non-centrally cleared derivatives has been deferred by the Australian Prudential Regulation Authority (APRA).

The proposed prudential standard was due to take effect next month, but with no international guidelines in place, APRA has left the start date open.

The standard would apply to general and life insurers using non-centrally cleared derivatives above $3 billion.

APRA says it would apply to a derivative not cleared by a central counterparty – a clearing-house between counterparties of contracts traded in one or more financial markets.

The regulator says new prudential requirements “are intended to increase the transparency of bilateral positions between counterparties, promote legal certainty over the terms of non-centrally cleared derivative transactions and facilitate the timely resolution of disputes”.

“APRA proposes to implement the risk mitigation standards for non-centrally cleared derivatives in a principles-based, rather than a rules-based, manner,” it says.

“The principles-based approach allows for the portfolio-based risk mitigation requirements to be applied with a scope and frequency that reflects the size, complexity and risk profile of an entity’s non-centrally cleared derivatives portfolio.”