TRAction’s reporting services include data validation and data enrichment to identify and resolve errors as well as ensure the format meets requirements prior to trade repository submission.
We’ve identified the most common errors made in ASIC OTC derivative trade reporting. In this article, we will walk you through the first three errors and provide steps on how to rectify each one.
1. Reporting all trading platforms and systems
All reportable trades from all trading platforms and systems are required to be reported to ASIC.
In recent years, ASIC issued fines to AMP and Westpac for not reporting large quantities of OTC derivatives transactions because they had forgotten about entire systems containing the information.
What goes wrong?
We are not informed of any additional trading platforms that our clients use after the onboarding process is complete. As a result, trades from the additional platforms are not reported. It is important to note that this can also apply to financial services firms who do not use a reporting delegate as a lack of communication between departments can lead to the same mistake.
How is this fixed?
Check you are reporting trades from all of your platforms and systems. For example, have you added MetaTrader5 or another platform and forgotten to update your reporting delegate or processes?
If you are using a reporting delegate, remember to inform them of your new platforms.
2. Full visibility of your reportable trade accounts (only applicable to clients using MT4 API, MT4 & MT5 linked servers)
Some clients use the grouping method to organise their clients’ trading accounts into particular categories. Trades from certain groups are reportable and some are not. Clients commonly set up different groups for the following purposes:
- their offshore entities
- test accounts
- categorisation of their client types
What goes wrong?
The visibility settings for the groups are inaccurate, for instance, the test accounts have been made visible to the reporting delegate rather than only the reportable trade accounts. Thus, the reporting that follows is incorrect.
How is this fixed?
If you use a grouping method to organise your trade accounts, it’s imperative that you regularly conduct internal reviews to ensure all the reportable trade accounts are visible to your reporting delegate or the team doing your ASIC OTC derivative trade reporting.
3. Addition of Symbols
This error commonly occurs when firms launch new financial product offerings.
What goes wrong?
TRAction is not informed of any new symbols relating to the new financial product that our clients are trading. If a new symbol is not added to our system prior to the processing of the files, our system will fail to recognise the new symbol and consider it a non-reportable product. This can result in missing trades.
How is this fixed?
When we identify any new symbol in our clients’ data files, we contact them promptly to request all the required information about the new symbol to avoid any missing trades. If you are using a reporting delegate like TRAction, inform them in advance of any additional symbols before trading them.
If you report on your own, do a regular review to ensure all the financial products that are reportable under ASIC are being reported.
To improve the accuracy of your overall reporting, we encourage you to be diligent with regard to informing your reporting delegate or other internal departments about the introduction of any new platforms, systems or financial products in your business. We also recommend you set aside time to review your system settings and ensure that your reports are generated correctly.
If you have any questions, please do not hesitate to contact us.
