Is it the trust or trustee required to obtain a Legal Entity Identifier (“LEI”) under ASIC OTC derivative reporting? As an Australian reporting entity, if your non-individual clients do not have an LEI, 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 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).
Individual trustee/ Corporate trustee
Only corporate trustees of a trust or corporate trustees of Self-Managed Superannuation Funds (“SMSF”) are required to obtain LEIs. Here’s a summary of some potential combinations:
- Trust/SMSF with corporate trustee
For corporate trustees, the reporting rules require them to obtain and report the LEI as part of trade information.
- Trust/SMSF with individual trustee
For individual trustees, the reporting requirements will remain unchanged as they were defined as non-reporting counterparties in ASIC Derivative Transaction Rules (Reporting) 2013. Instead of an LEI, the counterparty ID will be the internal trading platform ID.
- Trust/SMSF with joint individual trustees
For joint individual trustees, the reporting requirements will remain unchanged as they were defined as non-reporting counterparties in ASIC Derivative Transaction Rules (Reporting) 2013. Instead of an LEI, the counterparty ID will be the internal trading platform ID.
How can TRAction Fintech assist you to comply with trade reporting obligations?
TRAction Fintech closely monitor the LEI requirements and ensure our clients are compliant with the latest changes under the new regulations.
If you would like to discuss the process of getting LEIs for your clients or have any questions, feel free to contact us.