6.3 End-user exemption from trade reporting

Permanent exemption of end‑users from trade reporting

Regulations exempting end‑users from trade reporting are scheduled to expire at the end of 2014.

It is proposed that, rather than being allowed to expire, the end‑user exemption from trade reporting be made permanent. This is in order to give certainty to stakeholders and to focus trade reporting implementation on the major market participants in Australia.

The exemption may need to be narrowed to ensure that appropriate information on systemically important OTC derivatives trading is available to regulators. Details of the exemption will be consulted upon following the analysis by ASIC of derivatives use in the Australian market, currently underway. The regulators will also consider the impact of reporting of systemically important OTC derivatives transactions on global efforts to coordinate the reporting framework.

A more tightly targeted AFSL reference in the regulations

Stakeholders who hold an Australian financial services license (AFSL) with authorisations limited to commodity derivatives have also raised concern that the exemption, as it currently stands, could create an obligation with respect to derivatives not covered by their AFSL.

It is proposed that the regulation be amended so that obligations would only be imposed on AFSL holders with respect to derivatives authorised under their AFSL. So for example, if an entity holds an AFSL with authorisation only for electricity derivatives, ASIC could not make rules requiring reporting of AUD‑IRD trades by that entity.

Aside from this change, the application of trade reporting rules to other AFSL holders would remain a decision for ASIC, as is currently the case.

2 thoughts on “6.3 End-user exemption from trade reporting

  1. GreySpark Partners

    We agree that it is prudent for the regulation to be amended such that the trade reporting obligation should only be imposed on AFSL holders with respect to the specific derivatives authorized under their AFSL.
    With respect to permanent end user exemption from trade reporting, we feel it is important to define the specific methods and ways in which end user trades which may be systemically important to the Australian market will be picked up and tracked by the regulators. In the interest of market transparency, it is key that trends and fluctuations in the end user market are monitored and reported to the regulators for completeness and consistency with the international OTC derivatives markets.

  2. Marion Johnstone

    1. We agree with making the exemption of end users from trade reporting permanent. 2. We agree a specific and targeted AFSL reference in the regulations is appropriate.

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