As part of its efforts to comply with G-20 OTC derivatives reform commitments, Australia’s government and its securities’ regulator, the Australian Securities and Investments Commission, have issued new reporting guidelines.
New global OTC derivatives rules require the reporting and central clearing of derivatives trades, followed ultimately by exchange trading of standardised instruments. The newly published ASIC Derivative Transaction Rules (Reporting) 2013 rules specify the obligations of counterparties to report their reportable transactions and positions to licensed and prescribed repositories.
Derivative trade repositories will? maintain electronic databases of records of derivative transactions. The rules for these repositories cover issues such as application requirements and conditions, the manner in which they must provide their services and ASIC’s approach to regulation of overseas-based repositories.
ASIC concedes that there are currently no licensed Australian derivative trade repositories and provides suggestions for eight prescribed repositories. They include the Depository Trust & Clearing Corporation in Japan, UK, Singapore and USA, Chicago Mercantile Exchange, ICE Trade Vault, Hong Kong’s Monetary Authority, and American commodity swaps repository INFX SDR Inc
The rules specify what precise trade information needs to be provided for each type of derivative and when the reporting obligation will start for different classes of reporting entities and different instrument types. The planned timetable for transaction reporting commences several months earlier than position reporting.
The reporting rules also establish which entities will need to report. For Australian entities all OTC derivatives have to be reported, regardless of where the OTC derivative is entered into. The same applies to all foreign subsidiaries of Australian entities. End-users of OTC derivatives, meaning those that are neither financial institutions nor intermediaries, are not covered by the reporting regime. ASIC will consult on their reporting obligations later this year.