Jurisdiction - Australia
Reports and Analysis
Australia – Derivative Transaction Reporting.

15 May, 2013


Legal News & Analysis – Asia Pacific – Australia – Capital Markets




  • ASIC will soon issue rules which will establish a mandatory reporting obligation for participants transacting in certain classes of over-the-counter (OTC) derivatives. This will require participants to report their transactions and positions to a trade repository.



  • Identify whether you will be affected by these reporting obligations.
  • Ensure that you have arrangements and systems in place to report to a trade repository.
  • Consider engaging a reporting agent to report transactions on your behalf.



In late 2012 the Corporations Act 2001 (Act) was amended by the Corporations Legislation Amendment (Derivatives Transactions) Act 2012. The amending legislation introduced new Part 7.5A, which contains a framework for the regulation of derivatives transactions, including mandatory execution, reporting and clearing requirements. In particular, Part 7.5A contemplates that ASIC may make rules, to be known as derivatives transaction rules, in respect of these matters.

On 28 March 2013, ASIC released rules for the mandatory reporting of certain OTC derivatives – the Derivative Transaction Rules (Reporting) 2013 (draft Rules). At the same time ASIC released Consultation Paper 205 Derivative transaction reporting (CP 205) which contains more detail on the proposed reporting regime.

What derivatives will be affected?

At this stage, no determination has been made by the Minister as to which classes of OTC derivatives will be affected by the mandatory reporting obligation. However it is expected that the following types of derivatives will be reportable:


  • commodity derivatives
  • credit derivatives
  • equity derivatives
  • foreign exchange derivatives
  • interest rate derivatives.

Which entities will be affected?

The reporting obligations apply to Reporting Entities. The draft Rules define a Reporting Entity to be:


  • an Australian Entity (being an entity incorporated or formed in Australia, including a corporation, partnership or trust);
  • a foreign subsidiary of an Australian Entity;
  • a foreign authorised deposit-taking institution (ADI) that has an Australian branch; and
  • a foreign company which is registered as such under Part 5B.2 of the Corporations Act.

Which transactions will be reportable?

Reporting Entities will be required to report to a trade repository the details of a Reportable Transaction. Whether an OTC derivatives transaction is a Reportable Transaction will depend on the nature of the Reporting Entity concerned.

In the case of an Australian Entity and its foreign subsidiaries, all prescribed OTC derivatives transactions to which the entity is a counterparty are Reportable Transactions, regardless of where the contract was entered into.


In the case of a foreign ADI with an Australian branch or a registered foreign company, only transactions which are booked to the profit or loss account of a branch in Australia or which are entered into in Australia are Reportable Transactions.

Any central clearing counterparty which clears derivatives transactions in Australia (such as, for example, ASX Clear (Futures) and LCH.Clearnet, which have each indicated their intentions to clear interest rate derivatives in Australia) will be Reporting Entities in their own right. It is proposed that they will be subject to the reporting obligation.

What information must be reported?

The draft Rules specify the information which is required to be reported for each class of derivative transaction.

This includes transactional information in respect of a derivative transaction entered into, modified, terminated or assigned after the date on which the reporting obligation takes effect. The obligation is to report by no later than the business day following the execution, modification, termination or assignment of the transaction (T+1).

Reporting entities will also be required to report up-to-date information on mark-to-market valuations and collateral information in respect of reported transactions.

The draft Rules also require a Reporting Entity to report information in respect of open positions on the date the reporting obligation takes effect. It is proposed to allow a period of six months following the commencement date for this information to be reported.

To whom must the information be reported?

Under Part 7.5A of the Act, the information in respect of a Reportable Transaction must be reported to a licensed trade repository or another prescribed facility. At this stage there is no licensed trade repository. It is understood that the Government is considering prescribing a facility as an interim measure pending the licensing of one or more repositories.

ASIC is also proposing to allow foreign entities to report Reportable Transactions to an overseas trade repository, where there is a corresponding reporting obligation in the overseas jurisdiction which is subject to similar regulatory requirements, and where ASIC has in place co-operation arrangements and access arrangements in respect of Australian Reportable Transactions.

Implementation phases

ASIC proposes a phased implementation of reporting obligations, beginning with an interim reporting phase on a "opt-in" basis and then three further phases (Phase 1, 2 and 3). In each of these phases, the reporting obligation would first apply to credit derivatives and interest rate derivatives, with reporting of other asset classes (excluding electricity derivatives) to commence six months after the start date of each phase.

Phase 1 – major financial institutions – from 31 December 2013
These are entities which have greater than $50 billion of notional outstanding positions in OTC derivatives as at 30 September 2013 and are:

  • an Australian ADI
  • the holder of an Australian financial services licence (AFSL)
  • an exempt foreign licensee (being an entity which is exempt from the requirement to hold an AFSL and which is regulated by an overseas regulatory authority and which limits its dealings to wholesale clients)
  • a clearing and settlement facility licensee.


Phase 2 – other financial institutions – from 30 June 2014
These are financial institutions in the categories covered by Phase 1, but which were not captured in that phase because their notional positions as at 30 September 2013 were less than $50 billion.


Phase 3 – other counterparties – from 31 December 2014
All entities which trade in OTC derivatives and were not captured in Phase 1 or Phase 2 will be required to report from 31 December 2014, subject to any de minimis reporting thresholds which may be prescribed. Phase 3 will be subject to further consultation by ASIC later in 2013.


Ashurst Logo


For further information, please contact:


Jonathan Gordon, Partner, Ashurst
[email protected]

Paul Jenkins, Partner, Ashurst
[email protected]

Don Maloney, Partner, Ashurst
[email protected]

Jamie Ng, Partner, Ashurst
[email protected]

Corey McHattan, Ashurst
[email protected]

Joseph Chow,‚Äč Ashurst
[email protected]


Homegrown Capital Markets Law Firms in Australia


Comments are closed.