ASIC has amended the ASIC Derivative Transaction Rules (Reporting) 2013 (derivative transaction rules (reporting)) following industry consultation and feedback on Consultation Paper 221 OTC Derivatives Reform: Proposed amendments to the ASIC Derivative Transaction Rules (Reporting) 2013 (CP 221).
ASIC Commissioner Cathie Armour said, 'ASIC has carefully considered stakeholder feedback arising from CP 221 and has taken steps to make the reporting regime more effective and easier to comply with, while ensuring that the data being reported will allow regulators to meet the underlying objectives of the over-the-counter (OTC) derivatives reform.'
'Having access to comprehensive OTC derivatives data is key to understanding and supervising the OTC derivatives markets. The changes to the rules take into account the interests of participants in Australia’s OTC derivatives markets while preserving the remit of financial regulators,' Ms Armour said.
The changes to the derivative transaction rules (reporting) include:
introducing end-of-day or 'snapshot' reporting instead of intraday or 'lifecycle' reporting as a permanent reporting option
introducing a 'safe harbour' from liability for reporting entities using delegated reporting, if certain conditions are met
expanding the ability for foreign firms to rely on foreign reporting requirements in order to comply with their obligations under the derivative transaction rules (reporting), known as alternative reporting, while introducing a requirement for foreign entities who use alternative reporting to designate (or ‘tag’) transactions as being reported under the rules to enable that information to be made available for financial regulators and
making a number of other technical changes to the derivative transaction rules (reporting) reflecting our proposals in CP 221 and/or feedback received.
ASIC has decided, after consultation with other financial regulators, not to proceed with the proposal to require larger foreign subsidiaries of Australian authorised deposit-taking institutions (ADIs) and Australian financial services licence (AFS) licence holders to report OTC derivative transactions. We concluded that the regulatory benefit would not outweigh the additional compliance cost, however, regulators will keep the issue of the materiality of OTC derivatives holdings in foreign subsidiaries under review.
As part of the amendment to allow the option for reporting entities to use end-of-day (or 'snapshot') reporting on a permanent basis, we have also introduced a determination power for ASIC to require the reporting of intraday trades in a derivative or class of derivative. Although ASIC does not presently intend to exercise the power to require these intraday trades to be reported, for market integrity purposes we will continue to keep under review the need to require certain intraday OTC derivative transactions to be reported, such as for contracts for difference or margin foreign exchange derivatives.