South Africa Cracks Down on $2.5T OTC Derivatives Market

The Financial Sector Conduct Authority (FSCA) and Prudential Authority (PA) in South Africa are finally moving to require central clearing for over-the-counter derivatives, a reform they committed to after the 2008 financial crisis. The two regulators published Joint Communication 2 of 2026 on April 7, along with a discussion document outlining eligibility criteria for which OTC derivatives would need to be centrally cleared.

The first products targeted are South African rand-denominated interest rate swaps and forward rate agreements, the bread and butter of the country's OTC derivatives market. Standardizing their clearing would bring South Africa in line with reforms implemented by the US, EU, and other G20 nations years ago.

South Africa currently lacks a functional local central counterparty for OTC derivatives, which is a prerequisite for the entire framework to function. Building or designating one will be crucial for the implementation of these reforms, which have taken so long to materialize due to this infrastructure gap.