More Than a Decade on, the Australian Derivative Transaction Reporting Regime is Here to Stay With (More) Changes on the Way

Over a decade ago, Australia introduced requirements to report information about OTC derivative transactions as part of its G20 derivatives reform commitments in the aftermath of the global financial crisis.  The derivative transaction reporting rules made by ASIC establish these requirements in Australia.  These rules were originally introduced in 2013 (ASIC Derivative Transaction Rules (Reporting) 2013) and were remade in 2022 (ASIC Derivative Transaction Rules (Reporting) 2022).  These rules set out the requirements applicable to ‘Reporting Entities’ to report information about their OTC derivative transactions to licensed and prescribed repositories. Importantly, new rules (ASIC Derivative Transaction Rules (Reporting) 2024) are coming into force in October 2024.  Now is the time to engage with the detail of the regime, and ensure that your legal, compliance, operational and technological processes are up to date, fit for purpose and consistent with these requirements.

Since the G20 made its derivatives reform commitments, a raft of laws and rules relating to derivatives trade reporting (and other regulatory requirements for derivatives) have been implemented in a wide number of jurisdictions.  However, the information collected needs to be coordinated and consistent across international borders if it is to paint an accurate picture of the global OTC derivatives market. 

Discrepancies and differences between the rulesets across jurisdictions have meant that regulators have access to different information depending on the requirements of their rules, and market participants often have to grapple with complying with differing requirements in different places.  This has led to a set of complex, detailed and often prescriptive rulesets which are highly technical, both legally and operationally.

The trade reporting requirements imposed in various jurisdictions across the globe are now being adjusted in an attempt to improve and harmonise collected data.  Five jurisdictions will implement revised rules in 2024 – Japan on 1 April, the EU on 29 April, the UK on 30 September, and Australia and Singapore on 21 October.  However, differences will continue to exist.

As a result, it is crucial that market participants are aware of and understand the requirements which may apply to them in each relevant jurisdiction.  In Australia, this includes understanding the current rules, the various exemptions and relief instruments which apply in certain circumstances, as well as the new rules which will come into force in October this year.  Processes and procedures should be reviewed and updated to ensure compliance with both the current requirements and the new requirements.  There are also substantial changes contained in the 2024 rules including both technical changes to the information which is required to be reported, as well as changes to the requirements of the rules and their application.   Breaches of reporting rules can be serious and substantial penalties could apply and ASIC has repeatedly emphasised that one of the aims of amending the rules is to ensure improved data quality for Australian regulators.

ASIC has spent a considerable amount of time consulting on the upcoming 2024 rules, and is currently consulting on further amendments to be made to be implemented both in October 2024 and in April 2025.  However, ASIC has not yet released a consultation on updates to Regulatory Guide 251: Derivative transaction reporting (RG 251) to accommodate the proposed changes in the 2024 Reporting Rules – RG 251 will provide important guidance to reporting entities on the requirements of the Australian derivative transaction reporting regime. It will be important for reporting entities to watch out for, and carefully consider, the consultation on updates to it.

A brief timeline of the implementation of the derivative reporting requirements is set out below. 

ASIC’s latest consultation paper, CP 375 contains a number of important changes particularly for foreign reporting entities, as well as some other technical changes – it is available here.  It also proposes some amendments to the ASIC Derivative Transaction Rules (Clearing) 2015 (Clearing Rules). The table below contains a high-level summary of these changes.  The consultation closes on 28 March 2024.

If you would like some help considering the implications of these changes for your business or the trade reporting rules more generally, please reach out to us.  We have been advising on these rules since the start and are here to help.