Two government regulators have each released different sets of draft derivatives legislation and regulation for industry comment. The Federal Treasury has released a set of draft legislation and regulations to reform the Australian client money regime, saying the changes would "better align the Australian client money regime with international best practice and community expectations of consumer protection." These draft rules are part of a process that began in October 2015, when the Government announced that it would develop legislation to better protect client money as part of its response to the Financial System Inquiry.The Corporations Amendment (Client Money) Bill 2016 and Corporations Amendment (Client Money) Regulation 2016 - were released yesterday in draft format for comment, and are intended "to give effect to the proposals made in the policy paper, and deliver on the Government's commitment to better protect retail client money - while continuing to facilitate the efficient operation of wholesale derivatives markets," according to a release from the Federal Government.The changes aim to limit the ways in which Australian Financial Services licensees can deal with retail derivative client money (including that of sophisticated investors), based on an implication that the vast majority of retail investors, and indeed many sophisticated investors, are unable to evaluate counterparty risk in derivatives markets.Closing date for submissions is Friday, 25 March 2016. More information can be accessed here.In addition, the Australian Prudential Regulation Authority has released a consultation package for APRA-regulated institutions on margining and risk mitigation requirements for non-centrally cleared derivatives.  These proposals, draft Prudential Standard CPS 226 "Margining and risk mitigation for non-centrally cleared derivatives," generally follow G20 standards, although modified in some areas to avoid placing undue cost on regulated entities with relatively small levels of "non-centrally cleared derivative activity."Examples of non-centrally cleared derivative transactions may include interest rate swaps, foreign exchange forwards and swaps, commodity swaps, options or forward contracts.While the risk mitigation standards apply to all APRA-regulated institutions (excluding private health insurers), APRA said it expected only a small number of institutions would exceed the proposed minimum qualifying levels and therefore be subject to the new margin requirements. The qualifying levels will progressively reduce over the phase-in period, APRA said in a media release. From September 2017, variation margin will be required for APRA-regulated institutions that are in a margining group with non-centrally cleared derivative activity exceeding A$3 billion. From September 2020, initial margin will be required for APRA-regulated institutions that are in a margining group with non-centrally cleared derivative activity exceeding the minimum qualifying level of $12 billion.APRA invites written submissions on the draft prudential standard by 20 May 2016. Some parts of the standard are expected to be effective from 1 September 2016, with others being phased in over six months to one year.A discussion paper and draft CPS 226 are on the APRA website.