ASIC Implements Alterations to OTC Derivatives Reporting

The Australian Securities and Investments Commission (ASIC) has amended the Derivative Transaction Rules and corresponding derivative transaction rules on the

asicThe Australian Securities and Investments Commission (ASIC) has amended the Derivative Transaction Rules and corresponding derivative transaction rules on the heels of industry consultation and accompanying feedback on a consultation paper.

Back in December, ASIC intervened in a number of FX firms, implementing changes to enhance supervision for retail clients. In its latest move, ASIC has proposed a number of amendments after consultation with other financial regulators – the discussion centered on the obligation of large foreign subsidiaries of Australian authorized deposit-taking institutions (ADIs), along with Australian financial services (AFS) license holders to report OTC derivative transactions.

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After a lengthy process, ASIC determined that the regulatory benefits were not sufficient to outweigh the additional compliance costs incurred, however the materiality of OTC derivatives holdings in foreign subsidiaries will remain under review.

According to the official manifest, alterations are still applied to the derivative transaction rules reporting and 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.

According to ASIC Commissioner Cathie Armour in a recent statement on the rules amendment, “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.”

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“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,” added Ms. Armour.

ASIC Warns on Opteck

Another unlicensed binary options provider has been brought to regulatory light on Friday, culminating with the warning of Opteck.com. The binary provider is not licensed in Australia and ASIC has cautioned Aussie investors against the risks of dealing with such entities.

Opteck.com is operated by a Belize-based company B.H.N.V Online Ltd (BHNV) – BHNV does not hold an AFS license, nor is it an authorized representative of an AFS licensee.

According to Ms. Armour, “ASIC urges all investors considering trading in binary options to check they are dealing with an entity that holds an Australian financial services licence or is authorised by an Australian financial services licensee and regulated by ASIC. This can be done by searching the Professional registers on our website.”

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