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).
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, a service provider, a broker or any person.
A reporting entity that appoints a delegate is taken to have complied with their reporting obligations (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.
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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.
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:
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”