ASIC Regulatory Guide 251 - ABB

ASIC REGULATORY GUIDE 251: DERIVATIVE
TRANSACTION REPORTING
Brief overview
The Australian Securities & Investments Commission (ASIC) released Regulatory Guide
251 (RG 251) in August 2013. RG 251 provides guidance to Reporting Entities in relation to
their reporting obligations for over-the-counter (OTC) derivatives that relate to the following
asset classes:
• commodity derivatives other than electricity derivatives;
• credit derivatives;
• equity derivatives;
• foreign exchange derivatives; and
• interest rate derivatives.
The reporting obligations came into effect with the introduction of the ASIC Derivative
Transactions Rules (Reporting) 2013 (Rules) which were released in July 2013. The Rules
impose obligations on Reporting Entities to report information about their transactions and
positions in OTC derivatives to a licensed or prescribed trade repository. This applies to
both cleared and uncleared derivative transactions.
Who has to report?
The reporting obligations are imposed on “Reporting Entities”, which are each of the
following:
• an Australian entity must report information about all derivative transactions to which it is
a counterparty;
• a foreign subsidiary of an Australian entity, where the Australian entity is an authorised
deposit-taking institution (ADI) or an Australian financial services licensee, must report
information about all derivative transactions to which it is a counterparty;
• a foreign ADI that has a branch located in this jurisdiction must report information about
all derivative transactions booked to the profit and loss account of the foreign ADI; and
• a foreign company that is required to be registered in Australia as a foreign company
must report information about all derivative transactions booked to the profit and loss
account of the foreign company.
Reporting Entity
It is not entirely clear whether an agent of a counterparty (such as an investment manager
that has entered into an ISDA on behalf of several clients) is also a “Reporting Entity”. This
was an issue that the Financial Services Council raised in its submission to ASIC in
response to Consultation Paper 205, however, neither the Rules nor RG 251 address this
issue.
The better view, in our opinion, is that an investment manager that acts as an agent is not a
Reporting Entity. As a practical matter, however, it will be the investment manager that will
enter into the derivative and will most likely report on behalf of their client, the Reporting
Entity. This is consistent with the part of the Rules that permit a Reporting Entity to appoint
another person to report on its behalf. The Rules contemplate that the other person that
lodges or files the report on behalf of the Reporting Entity may be a counterparty, a central
counterparty, a trading platform, a service provider, a broker or any other person.
The reporting obligations could also possibly be delegated to a custodian who actually holds
the assets.
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ASIC Regulatory Guide 251: derivative
transaction reporting
Authors: Austin Bell and Alexandra Mew, September 2013
Given that the Rules are implemented in stages depending on, among other things, the
extent of a Reporting Entity’s derivative exposure, it will be the custodian or the Reporting
Entity itself (as opposed to an investment manager who may not manage all of the assets of
the Reporting Entity) that will be in a position to know when the Rules begin to apply to
them. For example, where a client – Party B under an ISDA - has engaged several
investment managers and authorised them to enter into derivatives, it will only be that Party
B counterparty (or their custodian (assuming there is only one custodian) that will know the
aggregate exposure across all derivatives entered into by all investment managers on
behalf of the Party B counterparty in order to determine when the Rules begin to apply to it
(see below under the heading “When do the reporting obligations commence?”).
When and where are reports lodged or filed?
The derivative information and any changes must be reported to the repository no later than
the end of the next business day after the requirement to report arises.
Reporting Entities that are Australian entities must report to a trade repository that is
licensed by ASIC (licensed repository).
Licensed repositories will be listed on the ASIC website. Currently, there are no licensed
repositories, however, Australian entities can report to the following prescribed foreign
entities:
• DTCC Data Repository (U.S.) LLC;
• DTCC Derivatives Repository Ltd.;
• DTCC Data Repository (Japan) KK;
• DTCC Data Repository (Singapore) Pte Ltd;
• Chicago Mercantile Exchange Inc.;
• INFX SDR, Inc.;
• ICE Trade Vault, LLC;
• the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance of
Hong Kong.
Non-Australian Reporting Entities can report to a licensed or prescribed trade repository.
What type of derivative information must be reported?
A Reporting Entity must report details about their transactions and positions when it relates
to the following asset classes:
• commodity derivatives that are not electricity derivatives;
• credit;
• equities;
• foreign exchange (FX); and
• interest rates.
A common set of data must be reported for each transaction, along with an additional set of
data that are specific to each asset class. This includes:
• the economic terms of the transaction;
• product, transaction and entity identifiers;
• information on whether the transaction is centrally cleared; and
• valuation and collateral information.
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ASIC Regulatory Guide 251: derivative
transaction reporting
Authors: Austin Bell and Alexandra Mew, September 2013
When do the reporting obligations commence?
The reporting obligations are being implemented in three phases between 1 October 2013
and 1 October 2015. The table below sets out the key dates (Note: the dates differ as to
whether the reporting is for transactions or positions).
Phase
Type of reporting
entity
Asset class
Opt-in
phase
Any reporting entities
that opt-in during the
opt-in reporting
phase by lodging an
opt-in notice with
ASIC
As specified in the optin notice lodged with
ASIC
The date(s)
specified in
the opt-in
notice
The date(s)
specified in the
opt-in notice
(no later than
30 September
2014)
Phase
1
An Australian entity
registered or
provisionally
registered with the
US Commodity
Futures Trading
Commission as a
swap dealer
Commodity derivatives,
credit derivatives,
equity derivatives,
foreign exchange
derivatives and interest
rate derivatives
1 October
2013
1 October
2014
Phase
2
A reporting entity
that is an Australian
ADI, an AFS
licensee, a CS
facility licensee, an
exempt foreign
licensee or a foreign
ADI with greater than
AUD$50 billion total
gross notional
outstanding in
derivatives as at 31
December 2013
Credit derivatives and
interest rate derivatives
1 April 2014
1 October
2014
Commodity derivatives,
equity derivatives and
foreign exchange
derivatives
1 October
2014
1 April 2015
Credit derivatives and
interest rate derivatives
1 October
2014
1 April 2015
Commodity derivatives,
equity derivatives and
foreign exchange
derivatives
1 April 2015
1 October
2015
Phase
3
A reporting entity
that is an ADI, an
AFS licensee, a CS
facility licensee, an
exempt foreign
licensee or a foreign
ADI that was not
required to report in
Phases 1 or 2
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Transaction
reporting
start date
Position
reporting
start date
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ASIC Regulatory Guide 251: derivative
transaction reporting
Authors: Austin Bell and Alexandra Mew, September 2013
Other Issues
Since foreign privacy restrictions may prevent the reporting of derivative trading information,
ASIC has the power to grant relief from all or specified provisions. Applications should
include an authoritative legal opinion from a local law practitioner giving evidence of how
compliance with the Australian reporting obligations would cause a breach of the foreign
law.
For further information please contact:
AUSTIN BELL
Partner
SHELLEY HEMMINGS
Partner
T +61 2 8247 9620
T +61 2 8274 9553
[email protected]
[email protected]
Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor
is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any
professional advice depends upon the particular circumstances of each case, neither the firm nor any individual
author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of
any articles. Before acting on the basis of any material contained in this publication, we recommend that you
consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation
(Australia-wide except in Tasmania).
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