The Australian Securities and Investments Commission (ASIC) is seeking industry feedback to proposed changes to the rules that required compulsory trade reporting of over-the-counter (OTC) derivatives.
The proposals aim for an effortless transition to the reporting regime after a recent revision by ASIC of the timetable for financial entities with less than $50 billion in OTC derivatives outstanding to start reporting OTC derivative transactions to trade repositories.
The corporate regulator proposed the changes on Friday after it spotted many issues where the derivative transaction reporting rules have either inflicted compliance costs on reporting entities that do not match up to the regulatory benefits of getting relevant data.
Out of three options laid on the table, ASIC is recommending option 2, which involves amending the derivative transaction rules (reporting) to reduce compliance costs and ensure derivative trade data is "complete and comprehensive".
It is seeking to implement ‘snapshot reporting' as a permanent reporting option, as well as let foreign entities report to prescribed trade repositories in jurisdictions other than the one where they are incorporated.
It also wants foreign entities that use alternative reporting arrangements to ‘tag' transactions as being reported under the derivative transaction rules.
It wants to amend the derivative transaction rules for delegated reporting to allow a ‘safe harbour' from enforcement action if certain conditions are met.
Others include changing the definition of ‘regulated foreign market', and require foreign subsidiaries of Australian financial entities to report OTC derivative transactions if the subsidiary meets a materiality threshold.
"Our proposals in Option 2 (our recommended option) are designed to address the issues we have identified under the current derivative transaction rules (reporting) that either impose unnecessary compliance costs on reporting entities or cause ‘gaps' in derivative trade data reported to regulators," the regulator said.
ASIC is seeking submissions until 29 August.
