Australian entities dealing in OTC derivatives are required to report transactions to an Australian Derivatives Trade Repository (ADTR) licensed by the Australian Securities and Investments Commission (ASIC).
Under ASIC’s Derivative Transaction Rules (Reporting) 2013 (ASIC’s Rules), Australian issuers of OTC derivatives need to report their reportable transactions.
ASIC’s Rules and Regulatory Guide 251 provide a framework for the regulation of OTC derivatives reporting, clearing and trade execution.
Essentially the requirements for an Australian Financial Services Licence (“AFSL”) derivatives issuer/broker are to carry out the following on a daily basis:
- Report all trades,
- Report end of day open positions, and
- Submit any modifications;
to a licensed ADTR.
What needs to be reported?
Under ASIC’s Rules, a reporting entity must report the following:
- each of its reportable transactions; and/or
- each of its reportable positions.
What are Reportable Transactions?
The requirements are divided into two categories:
- common data; and
- data specific to each asset class.
Reporting entities are required to report on the following specific asset classes:
- credit derivatives;
- commodity derivatives (other than electricity derivatives);
- interest rate derivatives;
- foreign exchange derivatives; and
- equity derivatives.
Broadly, the following information is to be reported for all derivative transactions:
- the economic terms of the transaction;
- the product, transaction and entity identifiers;
- information on whether the transaction is centrally cleared;
- valuation (mark-to-market, mark-to-model or other valuation) and collateral; and
- Legal Entity Identifier (LEI) for all non-individual clients. What are the LEI requirements and available exemptions? Should a trust or a trustee obtain an LEI?
Lifecycle vs Snapshot Reporting
Since 1 July 2019, ASIC has required OTC derivative transactions on the following products to be reported using the ‘lifecycle’ method: CFDs, Margin FX & Equity derivatives.
What is the difference between ‘lifecycle’ and ‘snapshot’ reporting?
|Requires you to report the entry into, exit of, as well as any modification of an OTC derivative which occurred during the preceding business day. |
This is often referred to as ‘intraday reporting’.
|Only requires you to report the positions which are open at the end of the business day.
This is often referred to as ‘end-of-day reporting’.
Read more on Lifecycle vs Snapshot Reporting.
ASIC’s Rules outline a common set of data fields and specific fields relating to each asset class. Broadly, the following information is to be reported for all reportable positions:
- the economic terms of the position;
- the product and entity identifiers;
- information on whether the position is centrally cleared; and
- valuation (mark-to-market, mark-to-model or other valuation) and collateral information.
Safe Harbour Benefits of Delegated Reporting
ASIC’s Rules allow a reporting entity to appoint one or more persons (each a delegate) to report on its behalf. A reporting entity that appoints a delegate pursuant to ASIC’s Rules is taken to have complied with their reporting obligations, subject to certain conditions, in relation to each reportable transaction and reportable position for which the delegate has been appointed to report. For further information, see our dedicated page on the safe harbour benefits of delegated trade reporting.
ASIC’s Rules require both parties to a derivative transaction to report to an ADTR. However, there is a relief from this principle where only one party is required to report if the reporting entity has less than A$5 billion total gross notional outstanding positions across all OTC derivatives for two consecutive quarters. View our page Single-Sided Reporting to find out whether this exemption applies to you.
Common ASIC Reporting Mistakes
We’ve identified some of the most common mistakes that finanical firms make in their ASIC reporting. Find out what these mistakes are and get it right from the start with our simple tips.
Delegated Reporting – How can we help you?
TRAction can provide you with delegated reporting solutions in accordance with the reporting requirements outlined above. We assist with understanding your ASIC trade reporting obligations and simplify your reporting process. If you want to find out more about our services, please contact us. Wondering about how much we charge? View our pricing schedules.
Reporting Quality Checks
Our clients can also conduct a regular check of the reporting done on their behalf. We provide detailed suggestions of how to carry out regular enquiries of a reporting delegate for ASIC OTC derivative trade reporting purposes.
Transitioning to new ASIC Reporting Arrangements
Are you thinking of changing your reporting delegate? Transitioning to a new regulatory reporting service can seem daunting. We understand the stress and inconvenience clients may face when switching reporting delegates or processes.
TRAction is here to make this process as easy as possible for you. We’ve worked extensively with DTCC in Australia and are very familiar with the reporting operations. TRAction will ensure it is a smooth process and will help you manage the transition between reporting delegates without hassle. Find out why you should make the transition to TRAction.
See the following pages for more information about specific aspects of transaction reporting in Australia:
- Are You Worried About Providing Sensitive Data?
- What Are The Penalties For Not Reporting Trades to ASIC?
- Trust or Trustee: Which should obtain an LEI?
- OTC Derivatives Trade Reporting in Australia – What do I have to report?
European MiFIR Reporting
Australian firms are brought into the ambit of MiFIR where a branch or subsidiary is incorporated in Europe, and financial instruments are traded on a European trading venue or where the firm interacts in certain ways with EU entities. For more information, visit our MiFIR page.
Australian brokers that deal in the Israeli Shekel derivative have reporting obligations to the Bank of Israel. All non-Israeli firms who hold a position above the threshold (USD15m in aggregate gross notional) are required to report all OTC derivatives on Shekel FX and rates. For further information on your Shekel reporting obligations, visit our Israeli Shekel page.