ASIC released a consultation paper on its website last Friday inviting industry participants to comment on the proposals within the paper, which ASIC said is an “indication of the approach it may take” but is not final policy.
The corporate regulator recommended option two in the consultation paper which involves amending the transaction rules to “help minimise compliance costs and to ensure that derivative trade data is comprehensive and complete”.
The proposal would involve making technical amendments such as incorporating ‘snapshot reporting’ as a permanent reporting option and allow foreign entities to report to prescribed trade repositories in jurisdictions other than the jurisdiction in which they are incorporated.
It would also require foreign entities that use alternative reporting arrangements to ‘tag’ transactions as being reported under the derivative transaction rules and Australian reporting entities to report to a prescribed trade repository if a licensed trade repository is not available.
If implemented the proposal would also amend the definition of ‘regulated foreign market’ and the derivative transaction rules for delegated reporting in order to “provide a safe harbour from enforcement if certain conditions are met”.
“Our proposal in option 2 is designed to address the issues we have identified under the current derivative transaction rules that either impose unnecessary compliance costs on reporting entities or cause ‘gaps’ in the derivative trade data reported to regulators” said the corporate regulator.
The other two options in the consultation paper were either to maintain the current derivative transaction rules with no amendment or require all foreign subsidiaries of Australian financial subsidiaries to report on over the counter derivative transactions rather than just some, as in the first proposal.
ASIC commissioner Cathie Armour said the corporate regulator is “continuing to respond to stakeholder feedback and is taking steps to refine the reporting regime to reduce the regulatory burden, especially for small financial entities”.
“We have sought to do this while ensuring that the underlying goals of the G20 over the counter (OTC) derivatives commitments, to improve the integrity and stability of the OTC derivative markets, are met,” said Ms Armour.
She said the rule changes will result “in a substantial overall deregulatory benefit for industry”.
