10 Jul 2014

Temporary relief from OTC derivatives reform under Phase 3: ASIC acknowledges practical limitations

by Sonia Goumenis, Brandy Tsang

The issue of ASIC's class exemption will provide much needed relief for Phase 3 Reporting Entities, who now have more time to ensure their internal reporting systems are robust.

ASIC's recent class order delaying the start date for reporting entities subject to "Phase 3" reporting requirements under Australia's OTC derivative trade reporting regime acknowledges the practical limitations they're experiencing in their efforts to achieve compliance by 1 October 2014 (the previous start date). This relief will benefit many industry groups, including the superannuation and funds management sector, as well as securitisation vehicles.

The confirmation comes after consultation by ASIC with interested parties for a staggered and delayed start to Phase 3 of reporting regime.

Who will benefit from the relief

The relief will benefit:

  • Australian authorised deposit taking institutions (ADIs) and foreign ADIs;
  • Australian financial service licensees, CS facility licensees and exempt foreign licensees,


  • held a total gross notional outstanding OTC derivative position of less than A$50 billion as of 31 December 2013 and were not required to report as part of "Phase 1" or "Phase 2"; and
  • have not opted in to the reporting requirements (being a Phase 3 Reporting Entity).

As noted above, the relief will benefit responsible entities of managed investment schemes and securitisation special purpose vehicles.

Phase 3 Reporting Entities were required under the ASIC Derivative Transaction Rules (Reporting) 2013 (DTRs) to start reporting transaction and position information on credit and interest rate derivatives to a trade repository by 1 October 2014.

Under the relief granted by ASIC in its class order exemption, Phase 3 Reporting Entities have been provided with additional time to comply with their reporting requirements and those requirements will be staggered.

The revised reporting dates will depend on the Phase 3 Reporting Entity's classification and specific conditions being met. The class exemption recognises two categories of Phase 3 Reporting Entities and provides each with new reporting start dates:

Phase 3A Reporting Entity

Phase 3 Reporting Entity which as at 30 June 2014 hold total gross notional outstanding positions of AUD $5 billion or more are designated Phase 3A Reporting Entities. The exemption clarifies that for the purposes of determining whether this threshold is met a reporting entity that is a trustee of a trust (which would include a securitisation trustee or a responsible entity for managed investment scheme) the threshold is tested on the basis of each separate trust. We note that this may have a different impact for securitisation programmes that are established using series segregated trusts rather than separate trusts for each transaction.

The new reporting timetable for Phase 3A Reporting Entities is:

Class of exempt derivatives to be reported on

Previous start date of reporting

Revised transaction reporting start date

Revised position reporting start date

Interest rate and credit derivatives

1 October 2014

  • 13 April 2015; or
  • if ASIC grants the first licence to a trade repository after 13 October 2014, 7 months after that date (such date, the Licensing Date)

6 months after the revised transaction reporting start date

Equity, FX and commodity derivatives other than electricity derivatives

1 April 2015

the earlier of:

  • 12 October 2015; or
  • 13 months after the Licensing Date.

6 months after the revised transaction reporting start date


Phase 3B Reporting Entity

A Phase 3 Reporting Entity that is not a Phase 3A Reporting Entity (that is, one that has total gross notional outstanding positions of less than AUD $5 billion) is designated a Phase 3B Reporting Entity. Subject to our comments above about series segregated trusts, we would expect most securitisation vehicles and managed investment schemes to fall within this category.

Class of exempt derivatives to be reported on

Previous start date of trade reporting

Revised Transaction Reporting start date

Revised Position Reporting start date

Credit derivatives, interest rate derivatives, equity derivatives, foreign exchange derivatives and commodity derivatives (not electricity derivatives)

1 April 2015

the earlier of:

  • 12 October 2015; or
  • 13 months after the Licensing Date.

6 months after the revised Transaction Reporting start date


All Phase 3 Reporting Entities continue to have the option to opt in to the reporting regime by lodging a notice with ASIC designating an effective date for compliance.

Conditions for gaining relief

To qualify for the relief Phase 3 Reporting Entities will be required to meet specific conditions. These include:

  • reporting derivative transaction and position information to a licensed (or prescribed, if there is no licensed) trade repository from the revised reporting dates as indicated above;
  • ensuring the derivative transaction and position information reported to a prescribed trade repository is accessible to ASIC and the trades are "tagged" as reported under the Australian reporting regime;
  • using reasonable endeavours to obtain express consent from or give notice to a counterparty, authorising the disclosure of derivative trade data under Australian laws; and
  • maintaining records to show compliance with the conditions that warrant this exemption.

What you need to do                     

The issue of ASIC's class exemption will provide much needed relief for Phase 3 Reporting Entities which continue to navigate through Australia's relatively new OTC derivatives reporting landscape.

Phase 3 Reporting Entities should take this time to ensure their internal reporting systems are robust and will permit them to meet the new deadlines. Some industries have lobbied for a complete exemption from the rules so further relief may yet follow (this includes for securitisation vehicles).

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.