ASIC Rewrite 2024

Implementation Dates:

ASIC Rewrite is scheduled to go live on October 21, 2024.

Consultation Paper 375 (CP375) proposes additional tweaks to the rules, with most changes expected to be live in April 2025.

What is ASIC Reporting?

Introduced in July 2013, Australian Securities and Investments Commission (ASIC’s) over the counter (OTC) Derivative Transaction Reporting regime mandates reporting entities to report derivative transaction information to trade repositories.

The regime has evolved through iterations to enhance global harmonisation and streamline reporting.

• Information on Transactions: Includes Unique Trade Identifier (UTI), counterparties involved, execution timestamp, etc.
• Collateral Details: Encompasses master agreements, type of collateralisation, etc.
• Trade Economics: Covers aspects such as notional amount, price, currency, maturity date, etc.

The ASIC Derivative Transaction Rules (Reporting) 2024, (The 2024 Rules), amend the current reporting regime in Australia. A set of substantial key changes have been made to the current rules including:

– International and technical standards

– Removal of delegated reporting safe harbour

– Small-scale buy-side entities

– Life-cycle reporting

– T+2 Reporting

What’s changing?

ASIC Rewrite changes will make upstream data quality even more important. Finding and managing the data for new required fields will bring new challenges, and the ISO XML format will mean you can no longer use the workarounds you did in CSV.

The removal of safe harbour means firms that delegate reporting will need new and robust processes to ensure accurate reporting. This represents a significant change in operating model for the Superannuation Funds who will need to address this challenge in 2024.

The ASIC Rewrite goes live on 21 October, 2024, tightening reporting rules in line with the EMIR (European Market Infrastructure Regulation) and CFTC (Commodity Futures Trading Commission) rewrites happening in Europe and North America. While the move to ISO XML formats and unified processes for things like UTI generation may make things more consistent, they may also make reporting more complex…

Snapshot of ASIC Reporting Requirements:

Entities under ASIC rules are obligated to provide prescribed data related to their activities in financial markets.

Data includes Transaction Information (UTI, counterparty, execution timestamp), Collateral Data, and Trade Economics (notional, price, currency, maturity date).

Changes aim at aligning with global standards, enhancing reporting accuracy, and streamlining derivatives data.

Key Features of ASIC Rewrite:

Extension of reporting deadline from T+1 to T+2, with T+4 for ‘packaged’ transactions.

Removal of ‘renewed LEI’ reporting requirement for certain entities.

Amendments to address concerns around re-reporting of data elements for legacy transactions.

Adoption of ISO 20022 XML message format for reporting, aiming at simplification and standardisation.

Unique Product Identifiers (UPIs) in ASIC Rewrite:

Under the ASIC Rewrite, UPIs are alphanumeric codes assigned to derivative products to uniquely identify them within transaction reports.

These identifiers help distinguish between different types of derivative instruments, ensuring clarity and consistency in reporting across various financial markets.

UPIs facilitate the aggregation and analysis of derivative transaction data, enabling regulators to monitor market activity and assess systemic risk effectively.

Unique Trade Identifiers (UTIs) in ASIC Rewrite:

UTIs are unique codes assigned to individual derivative trades or transactions within the ASIC reporting framework.

Each derivative trade executed by reporting entities is assigned a UTI, allowing for its distinct identification throughout its lifecycle, from execution to settlement.

UTIs enable regulators to track and analyse derivative trading activities, detect anomalies, and investigate potential instances of market abuse or non-compliance.

Integration with ASIC Rewrite Objectives:

The inclusion of UPIs and UTIs aligns with the objectives of the ASIC Rewrite, which aims to enhance the quality, consistency, and effectiveness of derivative transaction reporting.

Standardisation of UPIs and UTIs promotes regulatory transparency, facilitates data aggregation and analysis, and supports international harmonization efforts.

By implementing UPIs and UTIs as part of the ASIC Rewrite, regulators can improve the accuracy and reliability of derivative transaction reporting, ultimately contributing to the integrity and resilience of Australia’s financial markets.

In summary, UPIs and UTIs are essential components of derivative transaction reporting within the ASIC Rewrite, ensuring unique identification and standardisation of derivative products and trades. Compliance with UPI and UTI requirements supports regulatory objectives, enhances market transparency, and strengthens financial market oversight and stability.

What does this mean for you?

• Review of Regulatory Changes:

Firms should closely review the final rules of the ASIC Rewrite, including any consultation papers and guidance issued by ASIC.

It’s essential to understand the specific amendments, new requirements, and compliance deadlines introduced by the ASIC Rewrite.

• Assess Scope of Compliance:

Firms need to assess whether they fall within the scope of the ASIC Rewrite regulations.

This assessment involves identifying which derivative transactions and reporting obligations apply to the firm based on its activities within financial markets.

• Conduct Testing and Validation

Prior to the implementation deadline, firms should conduct comprehensive testing and validation of their reporting processes and systems.

This includes testing the accuracy and completeness of reported data, as well as validation against regulatory requirements and guidelines.

Is Your Firm Ready for the Upcoming ASIC Rewrite?

Firms need to review proposed rules and assess if they are in scope for compliance.

Emphasis on understanding changes, technical readiness, and engaging with third-party service providers if needed.

In Summary:

ASIC Rewrite introduces significant changes aiming at enhancing reporting accuracy, aligning with global standards, and simplifying reporting processes.

Firms need to assess their readiness, understand rule changes, and engage with stakeholders to ensure compliance.

How Novatus Global Can Prepare Your Firm for ASIC Rewrite:

Global regulators are clear – “firms can delegate the function of transaction reporting but not the responsibility.”

A key driver of firms moving to a delegated model is the pace, complexity, and volume of change across global derivative reporting regimes such as ASIC). The question we are most frequently asked, particularly given impending regulatory deadlines, is:

“How can we demonstrate effective oversight of our delegated brokers/managers in the quickest and most cost-effective manner?”

The answer to this is simple:

1. The award-winning Novatus En:ACT platform has been designed to show the Accuracy, Completeness, and Timeliness of each broker/manager’s transaction reports.
2. We manage the entire integration process end-to-end. This means we onboard all of your delegated brokers/managers to obtain data from their source systems.
3. The En:ACT platform performs comprehensive reconciliation from source system to what was reported to the trade repository, enabling you to quickly ascertain the reporting performance of each broker/manager. This means you can focus on fixing issues.
4. The En:ACT platform’s Compliance Rules Engine runs thousands of tests across 100% of trades and 100% of fields, covering all G20 reporting regimes. This is maintained by our in-house team of specialists to ensure they are up to date at all times.
5. Out of the box analytics, MI and reports enable you to quickly ascertain the root cause of issues and demonstrate effective governance.
6. In built workflow capabilities enable tracking of issues from identification to closure.
7. AWS hosted to ensure rapid implementation, with all data hosted in your local region.

We have a large and constantly growing community of firms utilising the En:ACT platform to oversee their delegated reporting.

We would love to connect you with our clients so you can hear how En:ACT has benefited them. Please get in touch to learn more about the En:ACT platform and its delegated oversight capabilities.