Do I need to Report?

October 22, 2015

OTC derivative issuers as reporting entities – to whom should they report under Australian law?

The answer generally depends on how the OTC derivative issuer is set up – whether it is

(1) an Australian entity;

(2) a foreign subsidiary of an Australian entity where the Australian entity is an authorised deposit-taking institution (ADI) or an Australian financial services (AFS) licensee;

(3) a foreign ADI that has a branch located in Australia or

(4) a foreign company that is required to be registered under Div 2 of Pt 5B.2 of the Corporations Act.

(1) Australian entity (i.e. entity, including a corporation, partnership, managed investment scheme or trust, incorporated or formed in Australia)

An Australian entity must report information about all the derivatives to which it is counterparty (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).

An Australian entity must report to a trade repository that is licensed by ASIC under the Corporations Act. There is currently only one trade repository that is licensed by ASIC under the Corporations Act – DTCC Data Repository (Singapore) Pte Ltd (in respect of commodity, credit, equity, foreign exchange and interest rate derivatives).

(2) Foreign subsidiary of an Australian entity, where the Australian entity is an ADI or an AFS licensee

A foreign subsidiary of an Australian entity, where the Australian entity is an ADI or an AFS licensee, must report information about all derivative transactions to which it is a counterparty (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).

Such a reporting entity can report to a licensed trade repository or a prescribed trade repository on an ongoing basis (subject to certain conditions being met) – see below.

(3) Foreign ADI that has a branch located in Australia

A foreign ADI that has a branch located in Australia must report information about all derivative transactions booked to the profit and loss account of the foreign ADI, or entered into by the foreign ADI, in Australia (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).

Such a reporting entity can report to a licensed trade repository or a prescribed trade repository on an ongoing basis (subject to certain conditions being met) – see below.

(4) Foreign company that is required to be registered under Div 2 of Pt 5B.2 of the Corporations Act

A foreign company required to be registered under the Corporations Act must report information about all derivative transactions booked to the profit and loss account of the foreign company, or entered into by the foreign company, in Australia (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).

Such a reporting entity can report to a licensed trade repository or a prescribed trade repository on an ongoing basis (subject to certain conditions being met) – see below.

For a reporting entity referred to in (2), (3) or (4) above, such entity may (instead of reporting to a trade repository licensed by ASIC) report to a prescribed trade repository on an ongoing basis by reporting information under the requirements of a foreign jurisdiction, where those requirements are substantially equivalent to the requirements that would otherwise apply to the reporting entity.

As at Feb 2015, the jurisdictions that ASIC considers to have implemented reporting obligations that are substantially equivalent to the derivative transaction rules (reporting) are:

  • Canada;
  • the European Union;
  • Hong Kong;
  • Japan;
  • Singapore; and
  • the United States.

On 25 June 2015, ASIC made a determination prescribing several overseas trade repositories. These are:

  • DTCC Data Repository (U.S.) LLC
  • Derivatives Repository Ltd
  • DTCC Data Repository (Japan) KK
  • DTCC Data Repository (Singapore) Pte Ltd
  • UnaVista Limited, and
  • the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance of Hong Kong.