ASIC Derivative Transaction Rules (Reporting) Determination 2023/679
I, Benjamin Cohn-Urbach, delegate of the Australian Securities and Investments Commission, make the following notifiable instrument.
Date 25 August 2023
Contents
Part 1—Preliminary
1 Name of notifiable instrument
2 Commencement
3 Authority
4 Definitions
Part 2—Determination
5 Excluded Derivatives
Part 3—Repeal and Withdrawal
6 Repeal and withdrawal
Part 1—Preliminary
1 Name of notifiable instrument
This is the ASIC Derivative Transaction Rules (Reporting) Determination 2023/679.
2 Commencement
(1) This instrument (other than subsections 6(1) and (2)) commences on the day after it is registered on the Federal Register of Legislation.
Note : The register may be accessed at www.legislation.gov.au.
(2) Subsections 6(1) and (2) commence 90 days after the day this instrument is published on the website of ASIC.
3 Authority
This instrument is made under subrules 2.2.8(3) and (5) of the ASIC Derivative Transaction Rules (Reporting) 2022.
4 Definitions
In this instrument:
CFD-like product means an OTC Derivative for which the following applies:
(a) the parties to the OTC Derivative are:
(i) a person (CFD Provider) who carries on a business of offering to enter into, and entering into, OTC Derivatives of that type with other persons (clients); and
(ii) a client;
(b) the client has the right to determine when the OTC Derivative will be terminated and OTC Derivatives of that type are typically terminated by the client entering into (other than as a result of a compression or clearing process) an offsetting OTC Derivative;
Note: The terms of the OTC Derivative may also provide for its termination in other circumstances.
(c) the client is required to pay money, or provide other security, to the CFD Provider as security for its obligations under the OTC Derivative.
Excluded Derivative has the same meaning as in Rule 2.2.8 of the Rules.
OTC Derivative has the same meaning as in Rule 1.2.4 of the Rules.
Rules means the ASIC Derivative Transaction Rules (Reporting) 2022.
Part 2—Determination
5 Excluded Derivatives
An OTC Derivative is an Excluded Derivative for the purposes of Rule 2.2.8 of the Rules if it is any of the following:
(a) an equity derivative;
(b) a derivative of the kind commonly known as a CFD;
(c) a derivative of the kind commonly known as Margin FX;
(d) a CFD-like product.
Part 3—Repeal and Withdrawal
6 Repeal and withdrawal
(1) To the extent ASIC Derivative Transaction Rules (Reporting) Determination 2018/1096 is still in force, it is withdrawn.
(2) To the extent ASIC Derivative Transaction Rules (Reporting) Determination 2018/1096 has not already been repealed, it is repealed.
(3) At the start of 21 October 2024:
(a) the determination in section 5 is withdrawn; and
(b) this instrument is repealed.
Overview
The ASIC Derivative Transaction Rules (Reporting) Determination 2023/679, enacted by Benjamin Cohn-Urbach, a delegate of the Australian Securities and Investments Commission (ASIC), addresses the need to update and refine the reporting requirements for certain derivative transactions. This notifiable instrument was introduced to ensure that the regulatory framework remains current and effective in overseeing the financial markets. The determination is made under subrules 2.2.8(3) and (5) of the ASIC Derivative Transaction Rules (Reporting) 2022, and its primary objective is to clarify which types of over-the-counter (OTC) derivatives are exempt from reporting obligations, thus streamlining compliance for market participants. The notifiable instrument also includes provisions for the repeal of previous determinations to ensure that the regulatory framework is consistently updated and aligned with current market practices.
Scope and Application
The ASIC Derivative Transaction Rules (Reporting) Determination 2023/679 applies to all parties involved in the trading of over-the-counter (OTC) derivatives in Australia, encompassing entities such as financial institutions, brokers, and individual traders. It outlines specific categories of derivatives that are exempt from certain reporting requirements, including equity derivatives, contracts for difference (CFDs), margin foreign exchange (FX) derivatives, and CFD-like products. The instrument is applicable nationwide as it is made under the authority of the Australian Securities and Investments Commission (ASIC) and operates within the Commonwealth jurisdiction. This Determination repeals and replaces the ASIC Derivative Transaction Rules (Reporting) Determination 2018/1096, effectively updating the regulatory framework to reflect current market practices and compliance standards. The instrument will cease to have effect from 21 October 2024, at which point it will be repealed and withdrawn.
Key Provisions
The ASIC Derivative Transaction Rules (Reporting) Determination 2023/679 sets out the rules for reporting certain derivatives transactions, specifically focusing on excluded derivatives. The main operative sections of this determination include the definitions of key terms such as "Excluded Derivative" and "CFD-like product" (s 4) and the identification of excluded derivatives (s 5). These sections serve to clarify which types of derivatives are subject to specific reporting requirements under the ASIC Derivative Transaction Rules (Reporting) 2022.
The obligations imposed by this determination primarily relate to reporting requirements for certain derivatives transactions. Financial entities must report transactions involving equity derivatives, CFDs, Margin FX derivatives, and CFD-like products as defined by the determination (s 5). This ensures that the Australian Securities and Investments Commission (ASIC) is kept informed about these transactions, facilitating oversight and regulation.
There are no specific offences outlined in this determination, but breaches of the reporting requirements could potentially lead to civil or criminal consequences under broader financial legislation. For instance, under the Corporations Act 2001, failure to comply with ASIC's reporting requirements could result in penalties, including fines of up to $210,000 for individuals and $1,050,000 for bodies corporate, depending on the nature and severity of the breach. Additionally, ongoing non-compliance could result in further penalties being imposed.