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 works in our Sydney office. She is co-CEO and founder of TRAction and focuses on assisting clients in Australia, Europe and Asia to meet their regulatory requirements with trade and transaction reporting solutions as well as development of the best execution platform. She has extensive experience in providing compliance and legal services to Australia’s financial services and credit participants. Her vast experience coupled with in-depth knowledge of business practicalities, regulatory compliance and financial services laws allow her to effectively and efficiently engage with clients.