Australia – October 12 Reporting Deadline Looming-The Safe Harbour Benefits of Delegated Reporting

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

Australian issuers of OTC derivatives (with less than A$5 billion gross notional outstanding positions as at June 30, 2014) will need to report for the first time from October 12, 2015 under the ASIC Derivative Transaction Rules (Reporting) 2013 (the Reporting Rules).

What Is Delegated Reporting?

The Reporting Rules allow a reporting entity to appoint one or more persons (each a delegate) to report on its behalf in accordance with Reporting Rules 2.2.1–2.2.5 and 2.2.8. This delegate may be a counterparty, a central counterparty, a Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term, a service provider, a broker or any person.

Safe Harbour

A reporting entity that appoints a delegate is taken to have complied with their reporting Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term (under Reporting Rules 2.2.1–2.2.5 and 2.2.8) in relation to each reportable transaction and reportable position for which the delegate has been appointed to report. However, this is only available if:

(a) the terms of the delegate’s appointment and any related agreements or arrangements are documented in writing; and

(b) the reporting entity makes regular enquiries reasonably designed to determine whether the delegate is discharging its obligations under the terms of its appointment.

Further, a reporting entity that appoints another person to report on its behalf remains responsible for taking all reasonable steps to ensure the completeness, accuracy and currency of the information reported.

Multiple Delegates

A reporting entity can comply with its reporting obligations by delegating them in accordance with the conditions set out for the safe harbour to multiple delegates. Where a reporting entity delegates to multiple delegates, it will need to ensure that each OTC derivative transaction it enters into is covered by one of the delegation agreements. Where particular transactions are not covered by a delegation agreement, the reporting entity will remain responsible for reporting these transactions in accordance with the Reporting Rules.

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

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

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

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

September 20, 2015 – “Final Regulations on Single-Sided Reporting for OTC Derivatives”