Overview

The Financial Sector (Collection of Data) (Reporting Standard) Determination No. 1 of 2017, enacted by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, addresses a gap in the reporting requirements for derivative financial instruments within the superannuation industry. This determination revokes the previous Reporting Standard SRS 534.0 Derivative Financial Instruments and establishes a new standard to clarify the reporting of over-the-counter derivatives where no counterparty credit rating is available. The purpose is to enable RSE licensees to accurately report such details, thereby improving the quality of data available for APRA's supervisory functions and other relevant agencies. APRA determined that public consultation was not necessary due to the minor nature of the revisions. Additionally, the Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required for this instrument, and a Statement of Compatibility with human rights has been prepared, confirming that the instrument is compatible with human rights as it does not raise any human rights issues.

Scope and Application

The Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2017, issued by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, applies to financial sector entities in Australia, specifically regulated institutions and RSE licensees. This legislation mandates these entities to submit specified financial and accounting data through designated reporting forms to aid APRA's supervisory functions and to provide information to other government and non-government agencies. The instrument primarily focuses on amending the reporting standard SRS 534.0 for derivative financial instruments, particularly over-the-counter derivatives, to allow for more accurate reporting by RSE licensees by enabling them to report a counterparty credit rating grade of ‘not applicable’. This change responds to industry feedback indicating the previous reporting form's limitations in accurately capturing certain derivative details. The instrument revokes the previous SRS 534.0 made in 2015 and establishes the revised reporting standard, effective from 1 July 2016. The instrument does not require a Regulation Impact Statement and has been assessed as compatible with human rights under the Human Rights (Parliamentary Scrutiny) Act 2011, as it does not engage any applicable rights or freedoms recognised in the relevant international instruments.

Key Provisions

The Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2017 (the instrument) primarily revises the reporting standard SRS 534.0 Derivative Financial Instruments, which was originally made under the Financial Sector (Collection of Data) (reporting standard) determination No. 39 of 2015. The instrument revokes the previous standard and introduces a new version effective from 1 July 2016. The key change is to clarify the reporting requirements for directly held over-the-counter (OTC) derivatives by allowing Responsible Superannuation Entity (RSE) licensees to report a counterparty rating grade of ‘not applicable’ at item 3 on SRS 534.0. This adjustment aims to address the issue raised by the superannuation industry regarding the inaccuracy of reporting when the counterparty credit rating is unknown. The obligations imposed by this instrument are centred on ensuring that RSE licensees comply with the revised reporting requirements. Specifically, RSE licensees must use the updated SRS 534.0 form to report financial data accurately. This includes correctly reporting details of OTC derivatives, particularly when a counterparty credit rating is not applicable. By adhering to these standards, RSE licensees assist the Australian Prudential Regulation Authority (APRA) in its supervisory functions and ensure that data is correctly provided to other relevant agencies such as the Australian Bureau of Statistics and the Australian Securities and Investments Commission. There are no specific offences, penalties, or civil/criminal consequences outlined in the instrument for non-compliance with the revised reporting standard SRS 534.0. However, failure to comply with reporting standards generally can lead to regulatory scrutiny, enforcement actions, and potential financial penalties as prescribed under the Financial Sector (Collection of Data) Act 2001. The overarching legal framework implies that significant non-compliance could result in actions under the Act, including the imposition of administrative penalties. The exact penalties for non-compliance would depend on the severity and impact of the breach, but they could include fines and other corrective measures to ensure compliance.