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The overall objective of these reforms was to
enhance the transparency of OTC derivatives
transactions, promote fnancial stability across the
world and support the prevention and detection
of market abuse. A key factor of these reforms
was the focus on OTC derivative reporting.
ASIC have developed their Derivative Transaction
Rules (Reporting) 2013 (the rules) in response
to these G20 commitments on OTC derivative
reform. These rules require both parties to the
transaction to report to a licensed repository,
in Australia this is currently the DTCC Data
Repository (Singapore) PTE Ltd (DTCC), within
one business day of the transaction occurring. All
OTC derivative transactions, with the exception of
electricity derivatives, are captured.
There are two levels of reporting that need to
be performed, transaction reporting and position
• transaction reporting: reporting of all
OTC derivative transactions to which the
reporting entity is a counterparty (note that
there are 55 common data items for all OTC
derivatives, with additional items for specifc
• position reporting: reporting of all
outstanding OTC derivative positions to which
the reporting entity is a counterparty at a
point in time (note that there are 39 common
data items for all OTC derivatives, with
additional items for specifc derivative types).
Within Australia, there has been a staggered
implementation of these rules.
Following feedback from the fnancial services
industry, Treasury released draft regulations
dated 28 May 2015, which would allow for those
entities deemed to be phase 3B to implement
one-sided reporting---which means that 3B
reporting entities may not need to report trades
where the other counterparty reports the trade.
It must be noted that where the counterparty
also has derivative exposures of less than
$5 billion (that is if they are also a 3B reporting
entity), an agreement will need to be reached
by the two parties to the transaction as to who
has the reporting responsibility.
Where the counterparty is a foreign entity, the
relief is only available where:
• the counterparty is subject to foreign
reporting rules that are substantially
equivalent to Australia's reporting rules
• the counterparty actually reports in
accordance with the foreign reporting rules
to a prescribed trade repository
• the report is 'tagged' to Australia.
It should be noted that, despite any relief, the
ultimate responsibility for the accuracy of the
data reported rests with the trustee, not the
ARE YOU READY TO ACT NOW?
Reporting for some entities commenced almost
two years ago, while those superannuation
funds deemed to be 3A reporting entities had
to commence reporting as of 13 April 2015.
Phase 3B reporting entities that do not, or cannot,
avail themselves of the single-sided reporting
relief will need to commence reporting from
12 October 2015.
Our experience of the superannuation industry
reveals a considerable disparity in the awareness
of, and readiness for, these reporting reforms.
The key challenges relate to the understanding of
the reporting requirements at the most granular
level, the availability of suffcient data to meet
the minimum reporting requirements and the
managing of relationships with key stakeholders.
So, are you ready? In readiness for the
reporting requirements, if you have not already
done so, it is important that you:
• understand your portfolio and the associated
• apply for a Legal Entity Identifer (an LEI),
where you do not already have one
• engage now with your key stakeholders,
for example your custodian, investment
managers and counterparties
• identify the relevant roles and responsibilities,
and design the appropriate policies,
reconciliations and reporting
• maintain communication with your board
or investment committee.
If funds do need to report, they will need to
register and 'on-board' with DTCC. This process is
complex and will take some time.
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