Over-the-counter (OTC) CFD and Forex traders will be required to report all positions and transactions they enter into to a Derivative Trade Repository (DTR). Here we highlight the timeline for reporting, who to report to, and possible reporting exemptions.
1. Timeline for reporting
The timeline for AFSL holders with less than $50 billion notional principle outstanding as at 31 December 2013 (Phase 3), has recently been revised and extended. ASIC has now split Phase 3 entities into Phase 3A and Phase 3B entities.
Phase 3A: Reporting Entities that hold $5bn or more total gross notional outstanding in reportable OTC positions as at 30 June 2014. Total gross notional outstanding is defined at paragraph 1.2.7 of the ASIC Derivative Transaction Rules (Reporting) 2013 ("the Rules").
The Rules set out the transaction data you need to report, on pages 22-35. You also need to collect transaction position data from the same date, but you must only report it 6 months later. That data is set out on pages 36-43.
Phase 3B: all other Reporting Entities.
2. Who to report to?
The legislation sets out two different sets of repositories that you can report to:
A. Foreign licensed repositories as listed in the Corporations Regulations.
These include the likes of DTCC, ICE Trade Vault and the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance of Hong Kong. However, an entity can only report to these repositories until 30 June 2015.
B. Australian licensed repositories.
Australia has just issued its first DTR licence. ASIC granted a DTR licence to DTCC Derivatives Repository (Singapore) Pte Ltd (DDRS).
ASIC has also signed a Memorandum of Understanding with the Monetary Authority of Singapore which paves the way for any DTR recognised in Singapore to also be recognised in Australia (and vice versa).
If you are an Australian entity, you will need to report to a DTR within a reporting period that applies to your size and activities.
3. What to report?
You must report information about OTC derivative reportable transactions and reportable positions.
Reportable transactions include entry, modification, termination or assignment of/into an OTC derivative arrangement to which you are a counterparty, regardless of where the OTC derivative is entered into.
Reportable positions are all outstanding positions in OTC derivatives, so this includes transactions entered into between you and clients, liquidity providers, and some related entities.
4. Possible exemptions
Exemptions to the reporting obligations may apply:
- if you are licensed in Australia as a foreign entity (amongst other requirements); OR
- if another entity has been appointed to report on your behalf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.