The Government has introduced legislation to bring Australia's regulation of over-the-counter derivative markets into line with G20 recommendations.Financial institutions will have to comply with internationally-agreed "margining" (collateral) requirements when dealing in OTC derivatives. The new law ensures that they can give and enforce rights in respect of margin provided by way of security.Introducing the Financial System Legislation Amendment (Resilience and Collateral Protection) Bill yesterday, Assistant Treasurer Kelly O'Dwyer said: "The Bill delivers on Australia's G20 post-GFC commitment to address systemic risk associated with trade in OTC derivatives."Australian businesses will be ready and able to comply with international margin requirements for non-centrally cleared derivatives, due to be phased in from September this year."The new law requires institutions to provide collateral (margin) by way of security to cover the cost of default on a trade.The G20 nations came to an agreement in 2011 to add margin requirements on non-centrally cleared derivatives. Margin requirements are intended to reduce contagion effects in a financial crisis by ensuring that collateral is available to offset losses.The margin requirements are set by the Basel Committee on Banking Supervision and the International Organisation of Securities Commissions and will be administered locally by the Australian Prudential Regulation Authority.APRA released a draft prudential standard in February. A key part of the requirements is that margin collected is "immediately available to the collecting party in the event of the counterparty's default."