Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulation 2015 (157 of 2015)

Schedule 1   Amendments

Part 1   Amendments commencing day after registration

Corporations Regulations 2001

5   After Subdivision 2.1 of Division 2 of Part 7.5A

Insert:

Subdivision 2.1A - Derivative transaction rules imposing clearing requirements

7.5A.60 Definitions for Subdivision 2.1A

(1) In this Subdivision:

Australian clearing entity , in relation to a derivative transaction, has the meaning given by regulation 7.5A.61.

Derivative Transaction Rules (Reporting) means the ASIC Derivative Transaction Rules (Reporting) 2013.

foreign clearing entity , in relation to a derivative transaction, has the meaning given by regulation 7.5A.62.

representative capacity : an entity is a party to a derivative transaction, or holds a position relating to a derivative transaction, in a representative capacity if the entity is such a party, or holds such a position, in a capacity as the responsible entity for a registered scheme, or as the trustee of a trust.

total gross notional outstanding positions , in relation to an entity, means an amount worked out for the entity under derivative transaction rules, in accordance with subregulation (2).

(2) For the purposes of this Subdivision, derivative transaction rules may:

(a) set out a method for working out the total gross notional outstanding positions held by an entity in a representative capacity, or otherwise; and

(b) provide for an entity that starts, or stops, meeting a threshold referred to in subparagraph 7.5A.61(1)(a)(ii), 7.5A.62(1)(a)(ii) or (b)(iv) to be taken to meet, or not to meet, the threshold for transitional purposes specified by the rules.

7.5A.61 Meaning of Australian clearing entity

(1) An entity is an Australian clearing entity , in relation to a derivative transaction to which it is a party otherwise than in a representative capacity, if:

(a) the entity is an Australian ADI, or a financial services licensee, that:

(i) is incorporated or formed in Australia; and

(ii) holds $100 billion or more in total gross notional outstanding positions otherwise than in a representative capacity; or

(b) the entity is any other entity that:

(i) is incorporated or formed in Australia; and

(ii) has, in accordance with any derivative transaction rules, opted to be treated, for the purposes of those rules, as an Australian clearing entity in relation to derivative transactions to which the entity is a party otherwise than in a representative capacity.

(2) An entity is an Australian clearing entity in relation to a derivative transaction to which it is a party in a representative capacity in the circumstances set out in derivative transaction rules.

7.5A.62 Meaning of foreign clearing entity

(1) An entity is a foreign clearing entity , in relation to a derivative transaction to which it is a party otherwise than in a representative capacity, if:

(a) the entity is an ADI, or a financial services licensee, that:

(i) is incorporated or formed outside Australia; and

(ii) holds $100 billion or more in total gross notional outstanding positions otherwise than in a representative capacity; or

(b) the entity:

(i) is incorporated or formed outside Australia; and

(ii) in this jurisdiction, provides financial services relating to derivatives to wholesale clients only; and

(iii) is exempt under the Act (including these Regulations, or another instrument made under or for the purposes of the Act) from the requirement to hold a financial services licence for those financial services; and

(iv) is an entity whose activities relating to derivatives are regulated by an overseas regulatory authority; and

(v) holds $100 billion or more in total gross notional outstanding positions otherwise than in a representative capacity; or

(c) the entity is any other entity that:

(i) is incorporated or formed outside Australia; and

(ii) has, in accordance with any derivative transaction rules, opted to be treated, for the purposes of those rules, as a foreign clearing entity in relation to derivative transactions to which it is a party otherwise than in a representative capacity.

(2) An entity is a foreign clearing entity in relation to a derivative transaction to which it is a party in a representative capacity in the circumstances set out in the derivative transaction rules.

7.5A.63 Clearing requirements - prescribed facilities

(1) This regulation is made for paragraph 901A(7)(b) of the Act.

(2) Each facility in the following list is prescribed in relation to all derivatives:

(a) CME Clearing Europe Limited;

(b) Eurex Clearing AG;

(c) Japan Securities Clearing Corporation;

(d) NASDAQ OMX Clearing AB;

(e) OTC Clearing Hong Kong Limited.

(3) A facility determined by ASIC for the purposes of this subregulation is prescribed in relation to the class of derivatives specified in the determination.

(4) ASIC may, in writing, determine a facility for the purposes of subregulation (3) in relation to a specified class of derivatives, but only if ASIC is satisfied that:

(a) the facility's principal place of business is located in a foreign country; and

(b) the facility is authorised to operate as a central counterparty for the specified class of derivatives in that country; and

(c) the regulatory regime in the facility's principal place of business has substantially implemented the CPSS-IOSCO Principles applicable to the regulation of central counterparties; and

(d) adequate arrangements exist for ASIC and the Reserve Bank of Australia to have access to information about the level of clearing activity by participants that are incorporated or formed in Australia, in relation to derivatives that are subject to clearing requirements under the derivative transaction rules.

(5) A determination under subregulation (4) must be published by ASIC on its website.

(6) In this regulation:

CPSS-IOSCO Principles means the principles for financial market infrastructures:

(a) issued in April 2012 by the Committee on Payment and Settlement Systems (the CPSS) and the International Organization of Securities Commissions (the IOSCO); and

(b) as supplemented, superseded or modified from time to time by principles, recommendations or standards issued by the CPSS or IOSCO (or a successor of the CPSS or IOSCO).

7.5A.64 Persons on whom clearing requirements cannot be imposed

(1) This regulation is made for paragraph 901D(a) of the Act.

(2) The derivative transaction rules cannot impose clearing requirements in relation to a derivative transaction on a person who is not:

(a) an Australian clearing entity in relation to the transaction; or

(b) a foreign clearing entity in relation to the transaction.

Example: This regulation prevents the derivative transaction rules imposing clearing requirements on, among other things, a range of foreign public entities including the following (subject to paragraphs (2)(a) and (b)):

(a) central banks;

(b) Government debt offices;

(c) multilateral development banks;

(d) the Bank for International Settlements and other similar international organisations.

7.5A.65 Circumstances in which clearing requirements can be imposed

(1) This regulation is made for paragraph 901D(b) of the Act.

(2) The derivative transaction rules can only impose clearing requirements in relation to a derivative transaction on an entity that is an Australian clearing entity in relation to the transaction if the other party to the transaction is:

(a) an Australian clearing entity in relation to the transaction; or

(b) a foreign clearing entity in relation to the transaction; or

(c) a foreign internationally active dealer.

(3) The derivative transaction rules can only impose clearing requirements in relation to a derivative transaction on an entity that is a foreign clearing entity in relation to the transaction if the other party to the transaction is:

(a) an Australian clearing entity in relation to the transaction; or

(b) a foreign clearing entity in relation to the transaction; or

(c) a foreign internationally active dealer.

(4) In this regulation:

foreign internationally active dealer means any foreign entity, other than a foreign clearing entity, that is registered or provisionally registered as:

(a) a swap dealer with the Commodity Futures Trading Commission of the United States of America; or

(b) a securities-based swap dealer with the Securities and Exchange Commission of the United States of America.