On 16^th May ASIC published their second consultation paper (CP 361), following the first consultation (CP 334) of the proposed changes to simplify derivative transaction rules. This is the second consultation of three, and respondents have until 8^th July to comment on this second consultation paper ahead of a third consultation expected in Q4 2022. The main point of note is that ASIC have split the new rules across two go-live dates, the ‘Remade ASIC Rules’ estimated to commence on 1^st October 2023 and the ‘Further amended ASIC Rules’ thought to commence 1^st April 2024. As of April 2024, firms will have 6 months to update the relevant data of any trade that does not mature in the 12 months following 1^st April 2024.

Our regulatory experts at Quorsus have analysed the paper in detail and decomposed the key takeaways for ASIC reporting firms below, splitting out the core areas by their respective go-live dates and highlighting the key changes for each.

 

Remade ASIC Rules – October 2023

On 1^st Oct 2023, ASIC are aiming to go-live with all UTI and LEI requirements, implement lifecycle reporting for all products, as well as some other exemptions and partial data revisions. Below, we will explain the key developments in each of these areas to help firms understand what their upcoming requirements are.

1. UTI

CP 361 clarifies the conditions for UTI reporting as being any new transaction, or specific reportable transaction required when:

• A. entering an OTC Derivative agreement
• B. a party is assigned to an OTC Derivative agreement
• C. a change to the way the reporting entity records an OTC Derivative

ASIC aligns with ESMA by mandating that the Reporting entity responsible for generating the UTI provides it by no later than 10am Sydney time on T+1. The consultation also sets out a comprehensive waterfall methodology for establishing which reporting entity is responsible for generating a UTI.  Further guidance is expected in the next consultation paper on determining the earliest reporting jurisdiction.

2. LEI

As of 1^st October 2023, LEIs will be required to be reported as per the draft ASIC rules up to 31^st March 2024, where some data elements are changing in name. The main example here is that interest rate derivative will no longer require LEIs in leg-specific ‘Payer’ fields, as these fields are being removed as identifier provisions as part of ASIC’s move toward asset class agnostic reporting.

In response to significant pushback from respondents of the first consultation, ASIC are removing the requirement to update live trades where there is no LEI but there is already an identifier in place. They will also be retaining the grace period of two days after the requirement to report arises to source an LEI.

3. Lifecycle Reporting

ASIC will be requiring lifecycle reporting of all products, with exemption given to ‘small-scale buy-side’ entities. The proposed definition of such entities is those holding less than $12billion notional amount of non-centrally cleared derivatives.

4. Exemptions

Existing exemptions defined in exemption papers are being codified into the regulation, these include FX Securities Conversion, Spot transactions, and Clearing members in agency clearing.

 

Amended ASIC Rules – April 2024

1^st April 2024 represents the estimated go-live for the remaining proposed changes, most notably UPI requirements, additional data elements and the re-reporting requirement mentioned in the introduction.

1. UPI

The UPI will become a data element that must be reported and will embed within it numerous data elements that will no longer be required to be reported elsewhere. The full scope of the data elements that will be required to be separately reported are often asset class specific, and the consultation paper includes proposals for changes in commodity and equity product reporting. Firms are advised to refer to DSB guidance on how to request or obtain a UPI.

2. Data elements

ASIC is seeking to make their data asset class agnostic, and there are therefore a number of data elements being removed from reporting requirements with the aim of making reporting less duplicative. Within the paper, ASIC group data elements into the below categories and outline which data elements are proceeding from CP 334, which will not be included, as well as some newly proposed data elements for consultation.

1. UTI
2. Counterparty data
3. Direction data
4. Dates and timestamps
5. Clearing and trading
6. Notional amounts and quantities
7. Prices
8. Payments and settlements
9. Other payments
10. Custom baskets and underliers
11. CDS index
12. Packages and links
13. Other transaction reporting data elements
14. Valuation info
15. Collateral info

A table can be found in the appendix mapping the changes in data elements from the current ASIC rules through the October 2023 go-live as well as the subsequent April 2024 go-live.

3. ISO 20022 Messaging Standard

In line with G20, ASIC will be mandating ISO 20022 from April 2024.

Our Regulatory Reporting Practice are analysing changes across all major jurisdictions and are able to help you understand the impact of these changes and to help prepare for the significant challenges ahead.