ASIC reminds firms about changes to CFD, margin FX transactions reporting

Maria Nikolova

Certain transactions will have to be reported to derivative trade repositories using a ‘life cycle’ method, rather than an end-of-day ‘snapshot’ method.

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The Australian Securities & Investments Commission (ASIC) has earlier today posted its latest Market Integrity Report which covers highlights of the work of the regulator in the second half of 2018. Importantly, the document includes some reminders about recently introduced rules and future regulations.

Thus, ASIC reminds firms about changes to reporting for several derivatives products. The regulator is implementing its proposed changes to the way transactions in contracts for difference (CFDs), margin FX and equity over-the-counter (OTC) derivatives must be reported. The changes will provide better reporting to help the regulator monitor market misconduct.

The changes involved making an excluded derivative determination, requiring these types of transactions to be reported to derivative trade repositories using a ‘life cycle’ method, rather than an end-of-day ‘snapshot’ method.

Following consideration of feedback received on the proposal, an excluded derivative determination under subrule 2.2.8(3) of the ASIC Derivatives Transaction Rules (Reporting) 2013, covering CFDs, margin FX and equity OTC derivatives was made on November 30, 2018. effective from July 1, 2019.

In addition, the regulator stresses the importance of the entity identifier requirement under OTC derivative transactions reporting rules.

From April 1, 2019, financial entities that are required to report trades in OTC derivative transactions under the ASIC Derivative Transaction Rules (Reporting) 2013 must report a standard identifier for any company or other entity (excluding individuals) that is a counterparty to a transaction in an OTC derivative, including CFDs and margin FX.

The standard identifiers to meet this requirement are:

› Legal Entity Identifier (LEI)

› if no LEI or interim entity identifier is available for the entity, an international business entity identifier issued by Avox Limited (AVID)

› if no AVID is available, a Business Identifier Code (BIC).

A conditional short-term extension of relief has been granted.

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