ASIC Enacts Final Regulations on Single-Sided Reporting for OTC Derivatives

Patricia Tsang and Sophie Gerber outline Australian regulations which afford single-sided reporting relief in certain situations.

This article was written by Patricia Tsang and Sophie Gerber (Director, TRAction Fintech Pty Ltd which provides services to report on behalf of OTC derivatives issuers).

[dropcap color=”#000000″ font=”0″]A[/dropcap]s expected, final Australian regulations have been enacted which afford single-sided reporting relief in certain situations.

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Further to the original proposals, the final regulations include a safe harbour for the entity relying on the single-sided reporting relief where regular and reasonable enquiries have been made.Preview Changes

Who does the single-sided reporting relief apply to?

The single-sided reporting relief will apply in certain circumstances to:

(a)          Australian authorised deposit-taking institutions (ADIs);

(b)         Australian financial services licensees;

(c)          clearing and settlement facility licensees; and

(d)         exempt foreign licensees or foreign ADIs,

(not required to report or who did not opt in to report under Phase 1 or Phase 2) with total gross notional outstanding positions of less than A$5 billion for at least two consecutive quarters.

This is particularly relevant to entities who become subject to the ASIC Derivative Transaction Rules (Reporting) (Reporting Rules) for the first time on October 12, 2015.

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Requirement for a “reporting counterparty”

To obtain the benefit of the relief, the other party to the OTC derivative must be a “reporting counterparty”, subject to conditions which generally require the entity relying on the relief (the “exempt entity”) to obtain certain representations from the reporting counterparty.

 

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The safe harbour is only available where the exempt entity “makes regular enquiries reasonably designed to determine whether” the representations are true or being met.

Exempt entities need to implement a process to ensure that the required enquiries are made.

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For more information on this area, please see previous published articles by the authors:

23 August 2015 – “Australia – Will Single-Sided Reporting Relief Help OTC Derivative Issuers?”

6 September 2015 – “Australia – To Whom Should Australian OTC Derivative Issuers Report”

10 September 2015 – “Australia – October 12 Reporting Deadline Looming – Who needs to report under intermediary authorisation or authorised representative arrangements in relation to OTC derivatives?”

 

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