South Africa to finalize rules for $2.5T OTC derivatives market by 2028

South Africa’s two financial regulators are finally moving to require central clearing for over-the-counter derivatives, a reform the country committed to after the 2008 financial crisis.

The Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) published Joint Communication 2 of 2026 on April 7, along with a discussion document laying out eligibility criteria for which OTC derivatives would need to be centrally cleared. A public consultation period is now underway.

What’s actually changing

The first products on the chopping block are South African rand-denominated interest rate swaps and forward rate agreements. These are the bread and butter of the country’s OTC derivatives market, and standardizing their clearing would bring South Africa in line with reforms that the US, EU, and other G20 nations implemented years ago.

South Africa currently has no operational local central counterparty for OTC derivatives. Building or designating one is a prerequisite for the entire framework to function, and that infrastructure gap helps explain why these reforms have taken so long to materialize.

Before clearing rules kick in, mandatory reporting to Strate, the country’s trade repository, is set to begin by March 2027. Each transaction will require 169 data fields, a level of granularity designed to give regulators a clear picture of systemic exposure across the market.

Final-phase initial margin requirements for non-cleared derivatives are expected to be implemented by September 2025, creating a regulatory on-ramp before the larger clearing mandates arrive.

The scale of the market

South Africa’s OTC derivatives market carries approximately R45 trillion in outstanding notional value, roughly $2.5 trillion. That figure represents significant systemic exposure concentrated in a market that has, until now, operated largely on bilateral agreements between counterparties.

The reforms also carry weight for South Africa’s standing within the G20. The country made commitments alongside other member nations to reform OTC derivatives markets, and the pace of implementation has been a recurring point of scrutiny in Financial Stability Board peer reviews.

What to watch

The most immediate question is whether South Africa can establish a functioning local central counterparty in time. Without one, mandatory clearing is an aspiration rather than a rule.

Market participants will need to significantly upgrade their operational capabilities. The 169-field reporting requirement alone demands robust data management systems, and smaller firms may struggle with the compliance burden. The consulting period currently underway will likely surface pushback on implementation timelines from industry players who view the two-year window as aggressive given the infrastructure that still needs to be built.

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