What is single-sided reporting?
Australia’s reporting regime requires both parties to a derivative transaction to report to an Australian Derivative Trade Repository (“ADTR”). However there is a relief from this principle allowing single-sided reporting, i.e. where only one party is required to report under the ASIC Derivative Transaction Rules (Reporting) 2013 (‘Reporting Rules’).
Who does the single-sided reporting relief apply to?
To qualify for the single-sided reporting relief, there are two requirements that must be satisfied:
1) Gross notional outstanding position must be less than A$5 billion for two consecutive quarters
The single-sided reporting relief will apply to:
- Authorised Deposit-taking Institutions (“ADIs”);
- Australian Financial Services Licensees (“AFSLs”);
- clearing and settlement facility licensees; and
- exempt foreign licensees,
with total gross notional outstanding position across all OTC derivatives of less than A$5 billion at the end of two consecutive calendar quarters.
If a reporting entity reaches the A$5 billion threshold for two consecutive quarters, the single-sided relief will cease to apply and full reporting obligations (i.e. dual sided reporting) will apply instead. This means that a reporting entity can move in and out of the relief depending on the changes in the size of their derivatives portfolio at the end of a calendar quarter.
2) The other counterparty is already required or has agreed to report
In order to obtain the benefit of the single-sided relief, the reporting entity will also need to ensure the other party to the OTC derivative is:
- a reporting entity required to report information about the trade under the Reporting Rules and not relieved from that requirement under the single-sided relief;
- a reporting entity who otherwise reports information about the trade under the Reporting Rules; or
- a foreign entity reporting under a ‘substantially equivalent’ foreign regime to an offshore prescribed repository and designates or tags the information reported as reported under the Reporting Rules.
If the other party does not satisfy any of the above (e.g. end customer not a reporting entity), the relief will not be applicable even if the reporting entity can satisfy the first requirement.
Use the diagram below to help determine whether the single-sided reporting exemption is applicable to you:
What do I need to do if I want to apply single-sided relief?
If you wish to rely on the single-sided relief, you will need to communicate with your counterparty (reporting counterparty) and obtain a representation from them pursuant to Reg 7.5A.72 of Corporations Regulations 2001 (Cth). Although the legislation does not provide what representation is required, we have prepared a template letter which can be used – please contact us to obtain a copy.
How can TRAction Fintech help?
TRAction Fintech assists our clients to understand whether they are eligible to apply for the single-sided relief. Please contact us if you would like to know more about how TRAction Fintech can assist you.