Common Mistakes in ASIC OTC Derivatives Trade Reporting & How to Avoid Them

1. Missing or Inconsistent Counterparty Identifiers

Accurate counterparty identifiers (e.g. Legal Entity Identifier (LEI), AVID) are fundamental to compliant ASIC reporting.

The Problem: Inconsistent identifiers for the same counterparty across multiple submissions can lead to data discrepancies.

Solution:

• Standardise identifier formats across all systems.
• Perform regular checks to maintain consistency.
• Collaborate with reporting delegates to address and resolve discrepancies promptly.

2. Miscalculations in Notional Amounts

Errors in notional amount calculations can stem from inaccurate price multipliers or volume data.

The Problem:

• Incorrect application of contract sizes or calculation methods.
• Over-calculated volume leading to inflated notional values.

Solution:

• Verify contract size and calculation formulas for each product.
• Use automated validation to flag and address anomalies.
• Cross-check extracted product details regularly to prevent manual errors.

3. Failure to Account for All Trading Platforms

Every trade from all platforms must be reported to ASIC, yet firms often overlook trades from newly onboarded systems.

The Problem: Gaps in internal communication result in unreported OTC derivative trades, particularly from newer platforms.

Solution:

• Conduct regular platform audits to ensure full trade coverage.
• Inform reporting delegates of ASIC reportable platform additions promptly.
• Update processes to seamlessly integrate all platforms.

4. Poor Communication About Liquidity Provider Changes

Changes to liquidity providers (LPs) must be communicated to reporting delegates to ensure proper trade reporting.

The Problem: Failure to notify delegates of LP changes leads to unreported trades.

Solution:

• Update your ASIC reporting delegate about LP changes immediately.
• Reconcile handback files against raw data for accuracy.
• Schedule periodic LP reviews to catch and address gaps.

5. Errors in Trade Account Visibility

Grouping methods on platforms like MT4/MT5 can cause non-reportable accounts to be mistakenly included.

The Problem: Test or non-reportable accounts may be flagged for reporting, introducing inaccuracies.

Solution:

• Ensure visibility of reportable trading platforms to your reporting delegate or any staff conducting ASIC OTC derivative trade reporting.
• Limit delegate access to only reportable accounts.
• Perform audits of account groupings regularly.

6. Incorrect Timestamp Formatting

Datetime fields must adhere to ISO 8601 standards (e.g., YYYY-MM-DDTHH:MM:SSZ).

The Problem: Manual edits or software errors lead to incorrect timestamp formats, resulting in repository rejections.

Solution:

• Automate datetime field generation to ensure consistency across ASIC reports.
• Avoid manual file edits that risk format changes.
• Validate submissions before reporting.

7. Formatting Errors in Unique Trade Identifiers (UTI/USI)

UTIs must be accurately formatted for successful reconciliation.

The Problem: Manual handling of CSV files can result in scientific notation errors or truncated identifiers.

Solution:

• Automated generation of properly formatted CSV files.
• Robust validation to ensure UTI/USI accuracy.
• Reducing manual intervention for critical identifier fields.

8. Misunderstanding Single-Sided Relief Conditions

Single-sided relief for OTC derivative trades applies under specific conditions and cannot be assumed.

The Problem: Assuming counterparties are reporting trades leads to unreported transactions.

Solution:

• Confirm whether counterparties are fulfilling ASIC reporting obligations.
• Report all trades unless explicitly exempted.
• Collaborate with compliance teams for accurate reporting.

9. Insufficient Validation and Reconciliation Processes

Robust validation and reconciliation processes are crucial for accurate ASIC reporting.

The Problem: Failing to identify mismatches in reports leads to persistent errors and compliance risks.

Solution:

• Implement advanced validation tools to detect errors early.
• Regularly reconcile trade repository reports with internal records.
• Schedule periodic reviews to refine reporting systems and processes.

10. Delayed Reporting

Timely reporting is a key requirement under ASIC’s OTC derivatives trade reporting framework, and delays in submission can lead to non-compliance, penalties, and reputational damage.

The Problem:
Firms often face delays due to:

• Internal processing bottlenecks.
• Manual handling of large data sets leading to late submissions.
• Miscommunication with reporting delegates regarding deadlines.

Solution:

• Implement automated reporting systems to ensure timely submissions.
• Establish internal reporting timelines that provide a buffer before regulatory deadlines.
• Maintain regular communication with reporting delegates to confirm submission schedules./one