While it is proposed that there be a broad-ranging determination requiring reporting of derivatives trades in the first quarter of 2013, the obligations would be phased in.
There are two possible approaches for phasing in the requirements:
- the Government could make a regulation that restricts the timing of ASIC’s rule-making; or
- the Government could leave the timing of implementation to ASIC to determine in consultation with stakeholders and with regard to the technical challenges that emerge
3. Do you have a preference for the timetable being prescribed in regulation or implemented by a phased approach to ASIC rule-making?
The proposed timetable on which feedback is sought would separate commencement into a number of phases.
Phase 1: major financial institutions: these would be required to commence reporting of trades in the first phase.
- This phase would commence by the end of 2013 after:
- the trade reporting regime is in place, expected by mid-2013; and
- one or more relevant trade repositories have been licensed.
- The commencement date is considered further in the next section.
- Major financial institutions could be determined by reference to:
- legal status, such as being subject to mandatory reporting registration in other jurisdictions, for example, registration as a swaps dealer with the Commodity Futures Trading Commission (CFTC) or being under a mandatory obligation to report transactions under the European Market Infrastructure Regulation (EMIR) in the EU; or
- thresholds of activity, for example, based on gross notional outstanding across asset classes, if implemented through rulemaking, these thresholds could be developed by ASIC; or
- some other size proxy for the entity’s importance in the financial sector, such as a revenue proxy, balance sheet proxy or employee proxy.
Phase 2: domestically-focused financial institutions: Australian deposit taking institutions (ADIs) and larger AFSL holders (and those exempt from holding AFSLs under relevant ASIC class orders for foreign financial services providers) which are not within phase 1, would be required to report starting in Phase 2.
- It is proposed this phase would commence 6 months after Phase 1. It is expected that this would be the end Q2 2014.
- Larger AFSL holders and exempts could be identified by reference to thresholds of derivatives activity, or to other size proxies, as mentioned above. These thresholds or proxies would logically be lower than in phase 1.
Phase 3: end users: end users (including corporates), and other financial institutions not commencing reporting in Phase 2, would be subject to reporting in phase 3.
- Phase 3 would commence 6 months after Phase 2. It is expected that this would be the end of 2014.
- End users would be either subject to an overall activity threshold or size proxy.
- The threshold or proxy could be reduced over time, however there would also be an additional de minimis threshold or size proxy where there would be no obligation to report end-user to end-user transactions.
Within each phase, there would be scope for further differentiating between instrument classes, according, for example, to the availability of relevant licensed trade repositories
4. Do you have comments on the proposal timetable for implementing the trade reporting obligation? Or is there another option you prefer? If so, why?
5.For Phase 1, do you have a preference for referencing legal status, thresholds of activity, or size proxies? For Phases 2 and 3, do you prefer activity thresholds or size proxies?