Nevertheless, they also recommended that the authorities should be granted a legislated power to mandate outcomes in the event that the incentives prove insufficient to drive the necessary change on an acceptable time frame. One concern would be if there were perceived to be an opportunity for regulatory arbitrage between the Australian regime and those of other jurisdictions.
Another would be if, in assessing the sufficient equivalence of the Australian regime, other jurisdictions took into account whether or not a regulatory mandate was in place. Reliance in the first instance on market incentives is particularly relevant in the case of central clearing. Premature regulatory intervention could interfere with the competitive and commercial responses of central counterparties, clearing participants and other service providers.