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    Essential Understanding of the Upcoming ASIC OTC Derivative Reporting Regulation Changes

    Published: August 21, 2023

    Since 2020, several jurisdictions have updated or plan to update derivatives transaction reporting requirements to align with international standards. The Australian Securities and Investments Commission (ASIC) has reviewed its reporting rules and released a comprehensive set of rules which will come into effect on 21 October 2024.

    First Derivative is delighted to take you on a journey that will illustrate the important changes and steps that businesses must take to be compliant.

    ASIC Harmonisation Framework

    When examining the realm of ASIC, it’s clear that there are a multitude of resemblances with regulatory regimes such as CFTC rewrite, EMIR Refit, and MAS rewrite. ASIC Rewrite expands upon the requirements that first commenced in 2013 and aims to align to a set of international standards for:

    • Legal Entity Identifiers (LEIs);
    • Unique Transaction Identifiers (UTIs);
    • Unique Product Identifiers (UPIs);
    • Critical Data Elements (CDEs); and
    • Technical Standard for reporting under ISO 20022.

    To increase transparency in the market, ASIC introduces amendments to ‘Action Type’ reporting, including new values. It also introduces the ‘Event Type’ field, offering comprehensive details on the triggering business event for a specific report.

    In terms of action and event types, we find significant overlap across the ASIC Rewrite, EMIR Refit and CFTC Rewrite frameworks. This is demonstrated in the table below, which provides a comparative summary of the various event types.

    ASIC ​Rewrite EMIR Refit CFTC Rewrite
    TRAD = Trade TRAD = Trade TRDE = Trade
    NOVA = Step-in NOVA = Step-in NOVT = Novation
    COMP = Compression or Risk Reduction COMP = PTRR COMP = Compression or Risk Reduction
    ETRM = Early termination EART = Early termination EART = Early termination
    CLRG = Clearing CLRG = Clearing CLRG = Clearing
    EXER = Exercise EXER = Exercise EXER = Exercise
    ALOC = Allocation ALOC = Allocation ALOC = Allocation
    CREV = Credit event CREV = Credit event CRDT = Credit event
    CORP = Corporate Event CORP = Corporate Event X
    INCP = Inclusion in position INCP = Inclusion in position X
    UPDT = Update UPDT = Update X
    PTNG X PORT = Transfer
    X X CLAL = Clearing & Allocation
    Same accronym and share the same meaning
    Different accronym but share the same meaning
    Distinct meanings

    Understanding the Impacts

    While harmonising with international standards is a driving force behind the ASIC Rewrite, ASIC does have unique requirements which required diligent effort.

    The management of ‘Know Your Customer’ (KYC) information to identify ‘Small-scale Buy-Side’ reporting entities is an important aspect of these requirements. This entails implementing new procedures and technologies for the collection, verification, and secure storage of KYC data, which can be a time-consuming task.

    To comply with the timing reporting rules, the industry must establish strong systems to accurately identify and categorise trades that fall within the T+2 and T+4 deadlines.

    With the removal of safe harbour provisions, companies that delegate reporting responsibilities must establish comprehensive and robust oversight frameworks to effectively monitor submissions made on their behalf.

    The ASIC technical standards will undergo significant changes, necessitating adjustments throughout the entire technology stack with the inclusion of new data such as collateral and margin.

    What’s Next

    For the remainder of 2023, ensuring data quality becomes crucial for firms to provide accurate information in order to adhere to the new data requirement for regulators.
    The simultaneous implementation of various regulations is an opportunity to enhance systems and overcome operational challenges in reporting and control frameworks.
    First Derivative has an exceptional track record of consistently delivering regulatory solutions for our clients worldwide. Your organisation will greatly benefit from our expertise in this area. We are confident that we can meet the tight deadlines and successfully navigate these challenges.

    The power of Partnership: How First Derivative supports you

    At First Derivative, we bring extensive exposure and proven expertise in dealing with these regulatory transformations. Our unwavering commitment is to support you in successfully tackling the task at hand.
    First Derivative is deeply committed to leveraging the power of Artificial Intelligence and Regulatory Technology solutions to tackle regulatory challenges.
    We provide consistent support through our skilled team of pod-based delivery teams; comprised of PMs, BAs, QA testers etc. Our expertise in regulatory implementation, technology and data helps us navigate new regulatory policies and achieve successful outcomes.

    Katerina Saba, Senior Consultant - First Derivative

    Cathy Souza
    Regulatory Business Analyst
    Katerina Saba LinkedIn profile


    Join forces with First Derivative and embark on a transformative journey towards regulatory excellence.