Financial Sector (Collection of Data) (reporting standard) determination No. 28 of 2016 - Reporting Standard RRS 320.5 - Securities Subject to Repurchase and Resale and Stock Lending and Borrowing (Cth)
Financial Sector (Collection of Data) (reporting standard) determination No. 28 of 2016
Reporting Standard RRS 320.5 Securities Subject to
Repurchase and Resale and Stock Lending and Borrowing
Financial Sector (Collection of Data) Act 2001
I, Steve Davies, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901:
(a)REVOKE Financial Sector (Collection of Data) (reporting standard) determination No. 54 of 2006, including Reporting Standard RRS 320.5 Securities Subject to Repurchase and Resale and Stock Lending and Borrowing made under that Determination; and
(b)DETERMINE Reporting Standard RRS 320.5 Securities Subject to Repurchase and Resale and Stock Lending and Borrowing, in the form set out in the Schedule, which applies to financial sector entities to the extent provided in in paragraph 3 of the reporting standard.
Under section 15 of the Act, I DECLARE that the reporting standard shall begin to those financial sector entities, and the revoked reporting standard shall cease to apply, upon the date of registration of this instrument on the Federal Register of Legislation.
This instrument commences upon registration on the Federal Register of Legislation.
Dated: 23 September 2016
[Signed]
Steve Davies
General Manager
Supervisory Support Division
Interpretation
In this Determination:
APRA means the Australian Prudential Regulation Authority.
financial sector entity has the meaning given by section 5 of the Act.
Schedule
Reporting Standard RRS 320.5 Securities Subject to Repurchase and Resale and Stock Lending and Borrowing comprises the 11 pages commencing on the following page.
Reporting Standard RRS 320.5
Securities Subject to Repurchase and
Resale and Stock Lending and Borrowing
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Subject to what follows, it requires a registered entity that, at the end of the most recent complete financial year at the time of reporting, had total assets of $500 million or more to give APRA quarterly statements of securities subject to repurchase and resale and stock lending and borrowing.
It also provides that if there are two or more registered entities of the same category[1] in a group of related bodies corporate (e.g. two or more money market corporations in the group), and the combined value of their total assets was $500 million or more at the end of the most recent complete financial year, one of them must give APRA quarterly statements of securities subject to repurchase and resale and stock lending and borrowing.
[1] ‘Category’ is defined in paragraph 16 of this reporting standard.
If there is more than one registered entity of the same category in a group of related bodies corporate, only one of them will have to report to APRA under this reporting standard.[2] That report must cover all registered entities of the same category in the group.
[2] An example of how this reporting standard applies in relation to related bodies corporate of the same
This reporting standard outlines the overall requirements for the provision of the required information to APRA. It should be read in conjunction with:
•Form RRF 320.5 Securities Subject to Repurchase and Resale and Stock Lending and Borrowing and the associated instructions (all of which are attached and form part of this reporting standard); and
•Reporting Standard RRS 320.0 Statement of Financial Position.
Purpose
Data collected in Form RRF 320.5 Securities Subject to Repurchase and Resale and Stock Lending and Borrowing (Form RRF 320.5) is used for the purposes of the Reserve Bank of Australia. It may also be used by APRA, for the purpose of prudential supervision, and the Australian Bureau of Statistics.
Application
This reporting standard applies to those registered entities outlined in paragraph 3.
Information required
Subject to paragraph 4, a registered entity must provide APRA with the information required by Form RRF 320.5 in respect of a reporting period if, at the end of the most recent complete financial year for the registered entity, it:
(a)had total assets of $500 million or more;[3] or
[3] For the purposes of this test, assets are to be valued in accordance with their current market value.
(b)was one of a number of registered entities that, during the reporting period, were:
(i) of the same category as the first-mentioned registered entity; and
(ii) related bodies corporate of each other
and, at the end of the most recent complete financial year for the first mentioned registered entity, had combined total assets of $500 million or more.
4. However, a registered entity is not required to report in respect of a particular reporting period if another registered entity has reported under this reporting standard in respect of that reporting period, and that other entity is both:
(a) a related body corporate of the first-mentioned registered entity; and
(b) of the same category as the first-mentioned registered entity.
Example of the application of paragraphs 3 and 4: RE1 Ltd is a registered entity. Under section 11 of the Collection of Data Act it has been allocated to the category of ‘money market corporation’. At the end of the most recent complete financial year it had assets of $40 million. RE2 Pty Ltd is a subsidiary, and therefore a related body corporate, of RE1. It is also a money market corporation. At the end of the most recent complete financial year it had assets of $20 million. For the purposes of the test in paragraph 3(b) their respective total assets are added together, producing a total of $60 million. This exceeds the $50 million test in paragraph 3(b). Having regard to paragraph 4, one of the two companies is required to report to APRA under this reporting standard in respect of the reporting period (assuming there are no other money market corporations in the group that have reported to APRA in respect of that reporting period).
Reporting periods and due dates
Subject to paragraph 6, a registered entity must provide the information required by this reporting standard for each quarter ending 30 September, 31 December, 31 March and 30 June.
APRA may, by notice in writing to a particular registered entity, vary the timing of a reporting period for the registered entity (to align it with the registered entity's own financial year, within the meaning of the Corporations Act 2001) or vary the duration of a reporting period for the registered entity.
The information required by this reporting standard must be provided to APRA within 20 business days after the end of the reporting period to which it relates.
APRA may grant a registered entity an extension of a due date in writing, in which case the new due date for the provision of the information will be the date on the notice of extension.
Forms and method of submission
The information required by this reporting standard must be given to APRA either:
(a)in electronic form, using one of the electronic submission mechanisms provided by the 'Direct to APRA' (also known as 'D2A') application; or
(b)manually completed on paper, which must be faxed or mailed to APRA's head office.
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Authorisation
All information provided by a registered entity under this reporting standard must be subject to processes and controls developed by the registered entity for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the registered entity to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If a registered entity submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the registered entity to digitally sign, authorise and encrypt the relevant data. For this purpose APRA’s certificate authority will issue 'digital certificates', for use with the software, to officers of the registered entity who have authority from the registered entity to transmit the data to APRA.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a) the Principal Executive Officer of the registered entity; or
(b) the Chief Financial Officer of the registered entity (whatever his or her official title may be).
Minor alterations to forms and instructions
APRA may make minor variations to:
(a)a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b)the instructions, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify in writing each registered entity that is required to report under this reporting standard.
Transitional
15.A registered entity must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this reporting standard (being the reporting standard which this reporting standard replaces).
transitional reporting period means a reporting period under the old reporting standard:
(a)which ended before the date of revocation of the old reporting standard; and
(b)in relation to which the registered entity was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Interpretation
In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
category means a category to which a registered entity has been allocated under section 11 of the Financial Sector (Collection of Data) Act 2001.
Principal Executive Officer means the principal executive officer of the registered entity for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
registered entity has the meaning given in the Financial Sector (Collection of Data) Act 2001 (that is, a corporation whose name is entered in the Register of Entities kept by APRA under section 8 of that Act).
Note: references to registered financial corporations in the forms and instructions that form part of this reporting standard are taken to have the same meaning as registered entity.
related body corporate has the meaning given in section 50 of the Corporations Act 2001. reporting period means a period defined in paragraph 5 or, if applicable, paragraph 6.
Reporting Form RRF 320.5
Securities Subject to Repurchase and
Resale and Stock Lending and Borrowing
Instruction Guide
General directions and notes
Reporting entity
This form is to be completed by all Registered Financial Corporations (RFCs) that have total assets equal to or greater than $500 million, after consolidating all RFCs of the same category in a group of related bodies corporate (e.g. two or more money market corporations in the same group) on a Domestic books basis.
The Domestic books of the registered entity relates to the Australian books of the Australian entity and has the following scope:
this form should be completed on a consolidated basis for all legal entities in your Australian enterprise group that are required to file this return;
do not consolidate Australian and offshore controlled entities or associated entities that are not required to complete this form;
exclude offshore branches of the Australian registered entity from this reporting unit;
report your Australian consolidated entity’s operations/transactions that are booked inside Australia; and
include transactions with non-residents recorded on Australian books.
Reporting period
The form is to be completed as at the last business day of the stated quarter (i.e. March, June, September and December). All RFCs that have total assets equal to or greater than $500 million should submit the completed form to APRA within 20 business days of the end of the quarter.
Unit of measurement
All RFCs that have total assets equal to or greater than $500 million are asked to complete the form in thousands of Australian dollars rounded to the nearest whole number (no decimal place).
Timing
Report assets and liabilities, and transactions in assets and liabilities as at the date of change of ownership.
Netting
Unless otherwise specifically stated, institutions are to comply with the prerequisite for netting outlined in Australian accounting standards AASB 1014 Set-off and Extinguishment of Debt and AASB 1033 Presentation and Disclosure of Financial Instruments.
Term to maturity
References to term to maturity in this form are references to original term to maturity.
Valuation and currency conversion
Closing balances should be reported at market price effective at the reference date.
Where denominated in foreign currency stock market values in foreign currency should be converted to AUD at the spot rate effective as at the reference date.
Basis of preparation
Unless otherwise specifically stated, institutions are to comply with Australian accounting standards regarding the measurement of asset, liability and equity items.
Specific instructions
Refer to the sector definitions in the instructions to RRF 320.0 Statement of Financial Position (RRF 320.0) as a general guide for reporting by sector. In particular, care should be taken in reporting debt securities that appear to be issued by State, Territory and local government (and therefore classified on this form as ‘Other debt securities’), which may actually be issued by central borrowing authorities. State central borrowing authorities have taken over almost all bond issuance for funding required by State, Territory and local governments.
Securities subject to repurchase and resale and stock lending and borrowing
Repurchase/resale agreements (repos) are undertaken for the purposes of liquidity management, increasing income generated from a security, and/or to minimise the cost of borrowing. Securities lending tends to take place to cover "short" positions in a security, and/or to increase income generated from a security. Repos and securities lending are very similar, with only a very fine division between the two types of transactions. In both cases the arrangement involves the transfer of legal ownership of securities (debt or equity) between the original holder and "borrower", including the right for the "borrower" to on-sell the securities. However, in both transactions, the market risk on the security and right to holding gains (and losses) and income generated by the security remains with the original holder. Repos and securities lending both occur at a specified price with a commitment to repurchase the same or similar securities at a fixed price on a future date, which is specified in the contract or available on demand. Primarily the difference between repos and securities lending transactions is that securities lending involves the payment of a fee to the "lender" as an incentive to agree to the transaction as it generates an additional return on the security. The fee is independent of any income that may be earned on the security. Repo transactions however generate interest income for the "borrower" although in certain circumstances where the cash provider ("borrower") as a specific need for a security, the borrowing rate could fall to zero.[4] Repos involve the provision of collateral and an exchange of cash whereas securities lending doesn't necessarily involve cash exchange or collateral.
[4] "The Macroeconomic Statistical Treatment of Reverse Transactions", Statistics Department, International Monetary Fund, Thirteenth Meeting of the IMF Committee on Balance of Payments Statistics, Washington DC, October 23-27 2000, BOPCOM-00/13.
Securities subject to repurchase and resale
Report all securities (debt and equity) held under resale agreements and due for repurchase at the end of the reference period by counterparty to the agreement. Report all securities at market value.
Separate repurchase/resale agreements, even when with the same counterparty, should not be netted against each other if they involve different security types. Use the reconciliation check on this form to reconcile net securities subject to repurchase and resale with the RRF 320.0.
Separate repurchase/resale agreements, even when with the same counterparty, should not be netted against each other if they involve different security types.
Include:
reverse repos.
Stock lending and borrowing
Report all securities (debt and equity) borrowed and lent at the end of the reference period by counterparty to the agreement. Report all securities at market value.
Reconciliation with RRF 320.0
Securities purchased under agreement to resell
Securities purchased under agreement to resell & stock borrowing – total (RRF 320.5 Securities Subject to Repurchase and Resale and Stock Lending and Borrowing (RRF 320.5))
less:
stock borrowed
equals:
securities purchased under agreement to resell – net
less:
netting by counterparty
equals:
securities purchased under agreement to resell – gross
equals:
total repos component of other assets - claims arising from repos, stock borrowing, derivatives (RRF 320.0).
Securities sold under agreement to repurchase
Securities sold under agreement to repurchase and stock lending - total (RRF 320.5)
less:
stock lent
equals:
securities sold under agreement to repurchase – net
less:
netting by counterparty
equals:
securities sold under agreement to repurchase – gross
equals:
total repos component of other liabilities - claims arising from repos, stock borrowing, derivatives (RRF 320.0).
category is set out as a note to paragraph 4.
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