On 31 March 2019, relief from reporting counterparty LEIs for ASIC OTC derivative reporting ends. As it fast approaches and the realities of implementation become clear, we review whether it is the trust or trustee required to obtain a Legal Entity Identifier (“LEI”). As an Australian reporting entity, if your non-individual clients do not have an LEI, from 1 April 2019, you cannot allow them to enter into an OTC derivatives transaction with you.
The trustee is a ‘reporting entity’
Regulatory Guide 251: Derivative Transaction Reporting states that a trustee and not the trust is considered a that is subject to reporting obligations (RG251.16). “A responsible entity of a registered managed investment scheme or a trustee of a trust is also a reporting entity if it enters into a reportable transaction in its capacity as the responsible entity or trustee of an Australian entity.”
Whilst the trustee is technically defined as a reporting entity, it doesn’t have any transaction or position reporting obligations unless it holds an AFSL or similar (Table S 1.1: Transaction Reporting Requirements in ASIC Derivative Transaction Rules (Reporting) 2013). Note that, an AFSL that is not authorised in relation to derivatives or a foreign licensee who only provides financial services to wholesale clients are also exempted from the reporting obligations (Regulation 7.5A.50 of Corporations Regulation 2001).
If you would like to know more about whether a corporate trustee is required to obtain an LEI, please read the full text on our page “Trust or Trustee: Which should obtain an LEI?”
Sophie has worked with some of Australia’s largest financial services organisations in compliance, legal and operational roles. She has also worked with small businesses to provide tailored solutions with a strong understanding of business practicalities as well as obligations to regulators. This strong understanding allows Sophie to effectively engage with not only large financial organisations but also with small businesses. Sophie has an in depth knowledge of compliance and legal obligations for financial services businesses having vast experience in the financial services sector. Sophie continually works with a range of companies in the financial services industry, including OTC derivatives brokers.