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

(157 of 2015)

8 September 2015

Corporations Act 2001

1   Name

This is the Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulation 2015.

2   Commencement

 

(1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

      

(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3   Authority

This instrument is made under the Corporations Act 2001.

4   Schedules

Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1   Amendments

Part 1   Amendments commencing day after registration

Corporations Regulations 2001

1   Regulation 7.5A.30 (heading)

Repeal the heading, substitute:

7.5A.30 Reporting requirements - prescribed facilities

2   After subregulation 7.5A.50(2)

Insert:

(2A) Also, the derivative transaction rules cannot impose requirements relating to a class of derivatives on financial services licensees:

(a) who are taken not to be end users only because of paragraph (3)(c); and

(b) whose Australian financial services licences do not authorise them to provide financial services in relation to that class of derivatives.

3   Subparagraph 7.5A.50(3)(d)(i)

Repeal the subparagraph, substitute:

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

4   At the end of regulation 7.5A.50

Add:

(4) This regulation does not apply to a provision of any derivative transaction rules to the extent that the provision imposes clearing requirements or requirements that are incidental or related to clearing requirements.

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.

Part 2   Amendments commencing 1 October 2015

Corporations Regulations 2001

6   After Subdivision 2.1A of Division 2 of Part 7.5A

Insert:

Subdivision 2.1B - Phase 3 reporting entities - exemption from OTC derivative reporting requirements

7.5A.70 Definitions for Subdivision 2.1B

In this Subdivision:

ASIC exemption instrument meansASIC Instrument [14/0633].

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

OTC derivative (short for over-the-counter derivative) means an OTC Derivative within the meaning of the Derivative Transaction Rules (Reporting).

OTC derivative position means a position relating to an OTC derivative transaction.

OTC derivative position information means Derivative Position Information within the meaning of the Derivative Transaction Rules (Reporting), as in force on 1 October 2015, about OTC derivative positions.

OTC derivative transaction means a derivative transaction (within the meaning of Chapter 7 of the Act) relating to an OTC derivative.

phase 3 reporting entity means a Phase 3 Reporting Entity within the meaning of the ASIC exemption instrument as in force on 1 October 2015.

reporting counterparty : see regulation 7.5A.72.

reporting entity means a Reporting Entity within the meaning of the Derivative Transaction Rules (Reporting), as in force on 1 October 2015.

representative capacity : an entity is a party to an OTC derivative transaction, or holds an OTC derivative position, 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 a phase 3 reporting entity, has a meaning affected by the ASIC exemption instrument, as in force on 1 October 2015.

7.5A.71 Exemption - single-sided transaction and position reporting

(1) This regulation is made for paragraph 907E(2)(a) of the Act.

Exemptions

(2) A phase 3 reporting entity is exempt from a provision of the Derivative Transaction Rules (Reporting) requiring the entity, at a particular time, to report information about an OTC derivative transaction to which the entity is a party if, at that time:

(a) regulation 7.5A.73 applies to the entity in relation to the transaction; and

(b) the other party to the transaction is a reporting counterparty in relation to the phase 3 reporting entity and the information.

(3) A phase 3 reporting entity is exempt from a provision of the Derivative Transaction Rules (Reporting) requiring the entity, at a particular time, to report OTC derivative position information in relation to an OTC derivative position to which the entity is a party if, at that time:

(a) regulation 7.5A.73 applies to the entity in relation to the position; and

(b) the other party to the position is a reporting counterparty in relation to the phase 3 reporting entity and the information.

Effect of exemption on ASIC exemption instrument

(4) Subregulation (5) applies if a phase 3 reporting entity is exempt under this regulation from a provision of the Derivative Transaction Rules (Reporting) requiring the entity to report information about a particular OTC derivative transaction or OTC derivative position.

(5) The entity is also exempt from subsection 907D(3) of the Act in relation to a provision of the ASIC exemption instrument that imposes a requirement to report information about the transaction or position as a condition of an exemption under that instrument.

7.5A.72 Reporting counterparties

(1) This regulation sets out, for the purposes of regulation 7.5A.71, the circumstances in which an entity (the other entity ) is a reporting counterparty in relation to:

(a) a phase 3 reporting entity that proposes to rely on an exemption in that regulation (the exempt entity ); and

(b) information that is:

(i) information about an OTC derivative transaction; or

(ii) OTC derivative position information.

Reporting entities

(2) The other entity is a reporting counterparty in relation to the exempt entity and the information if:

(a) the other entity has made a representation to the exempt entity:

(i) that the other entity is a reporting entity, other than a phase 3 reporting entity, that is required to report such information under the Derivative Transaction Rules (Reporting); or

(ii) that the other entity is a phase 3 reporting entity that is required to report such information under the Derivative Transaction Rules (Reporting), and that regulation 7.5A.73 does not apply to the other entity in relation to such OTC derivative transactions or OTC derivative positions; and

(b) the exempt entity makes regular enquiries reasonably designed to determine whether the representation is correct; and

(c) the exempt entity has no reason to suspect that the representation is incorrect.

(3) The other entity is a reporting counterparty in relation to the exempt entity and the information if:

(a) the other entity has made the following representations to the exempt entity:

(i) that the other entity is a reporting entity;

(ii) that the other entity will report such information in accordance with the Derivative Transaction Rules (Reporting); and

(b) the exempt entity makes regular enquiries reasonably designed to determine whether the other entity has been making reports in accordance with the representation referred to in subparagraph (a)(ii); and

(c) the exempt entity has no reason to suspect that the other entity has not been making such reports.

Foreign entities

(4) The other entity is a reporting counterparty in relation to the exempt entity and the information if:

(a) the other entity is a foreign entity; and

(b) the other entity has made the following representations to the exempt entity:

(i) that the other entity is subject to reporting requirements ( alternative reporting requirements ) in one or more foreign jurisdictions that are substantially equivalent to requirements under the Derivative Transaction Rules (Reporting);

(ii) that the other entity will report such information to a facility prescribed by or under subregulation 7.5A.30(2), in accordance with the alternative reporting requirements;

(iii) that the other entity will designate such information reported to that facility as information that has been reported in accordance with the Derivative Transaction Rules (Reporting); and

(c) the exempt entity makes regular enquiries reasonably designed to determine whether the other entity has been making reports in accordance with the representations referred to in subparagraphs (b)(ii) and (iii); and

(d) the exempt entity has no reason to suspect that the other entity has not been making such reports.

(5) The other entity is a reporting counterparty in relation to the exempt entity and the information if:

(a) the other entity is a foreign entity; and

(b) the other entity has made the following representations to the exempt entity:

(i) that the other entity will report such information to a licensed derivative trade repository in accordance with the Derivative Transaction Rules (Reporting);

(ii) that the other entity will designate such information reported to that repository as information that has been reported in accordance with the Derivative Transaction Rules (Reporting); and

(c) the exempt entity makes regular enquiries reasonably designed to determine whether the other entity has been making reports in accordance with the representations referred to in paragraph (b); and

(d) the exempt entity has no reason to suspect that the other entity has not been making such reports.

Subregulations do not limit each other

(6) Subregulations (2), (3), (4) and (5) do not limit each other.

7.5A.73 Application of exemptions

New phase 3 reporting entities

(1) For the purposes of regulations 7.5A.71 and 7.5A.72, this regulation applies to a new phase 3 reporting entity, in relation to an OTC derivative transaction or an OTC derivative position, at all times during a period:

(a) starting on the day the entity becomes a phase 3 reporting entity; and

(b) ending at the end of the quarter day that next follows 2 successive disqualifying quarter days for the entity.

Example: An entity becomes a phase 3 reporting entity on 1 November 2015. However, 31 December 2015 and 31 March 2016 are both disqualifying quarter days for the entity.

This regulation applies to the entity during a period starting on 1 November 2015 and ending at the end of 30 June 2016 (the quarter day that next follows the disqualifying quarter days on 31 December 2015 and 31 March 2016).

Continuing phase 3 reporting entities

(2) For the purposes of regulations 7.5A.71 and 7.5A.72, this regulationapplies to a continuing phase 3 reporting entity, in relation to an OTC derivative transaction or an OTC derivative position, at all times during a period:

(a) starting on the day after the quarter day that next follows 2 successive qualifying quarter days for the entity; and

(b) ending at the end of the quarter day that next follows 2 successive disqualifying quarter days for the entity.

Example: An entity becomes a phase 3 reporting entity on 1 November 2015. However, 31 December 2015 and 31 March 2016 are both disqualifying quarter days for the entity, so this regulation stops applying under subregulation (1) at the end of 30 June 2016.

30 June 2016 and 30 September 2016 are qualifying quarter days for the entity. This regulation applies to the entity again during the period starting on 1 January 2017 (the day after the quarter day that next follows the qualifying quarter days) and ending as provided for by paragraph (2)(b).

(3) In this regulation:

continuing phase 3 reporting entity means:

(a) an entity that was a phase 3 reporting entity on 30 September 2015; or

(b) a new phase 3 reporting entity for which the period mentioned in subregulation (1) has ended.

Note: For when this regulation first applies to an entity that was a phase 3 entity on 30 September 2015, see regulation 10.21.01.

disqualifying quarter day , for an entity, means a quarter day at the end of which the total gross notional outstanding positions held by the entity in the relevant capacity is 5 billion Australian dollars or more.

new phase 3 reporting entity means an entity that becomes a phase 3 reporting entity on or after 1 October 2015.

qualifying quarter day , for an entity, means a quarter day at the end of which the total gross notional outstanding positions held by the entity in the relevant capacity is less than 5 billion Australian dollars.

quarter day has the same meaning as in the Act.

Note: Under the Act, quarter days are 31 March, 30 June, 30 September and 31 December.

relevant capacity : a position is held by the entity in the relevant capacity , for the purpose of the definition of qualifying quarter day or disqualifying quarter day in this subregulation, if:

(a) the position is held by the entity otherwise than in a representative capacity, in the following circumstances:

(i) in a case in which the relevant definition is applied in relation to an OTC derivative transaction to which the entity is a party otherwise than in a representative capacity;

(ii) in a case in which the relevant definition is applied in relation to an OTC derivative held by the entity otherwise than in a representative capacity; or

(b) the position is held by the entity in a representative capacity in relation to a particular registered scheme or trust, in the following circumstances:

(i) in a case in which the relevant definition is applied in relation to an OTC derivative transaction to which the entity is a party in that capacity;

(ii) in a case in which the relevant definition is applied in relation to an OTC derivative held by the entity in that capacity.

7.5A.74 Reporting requirement - exemption stops applying

Scope

(1) This regulation applies to a phase 3 reporting entity, in relation to an OTC derivative transaction or an OTC derivative position, if:

(a) regulation 7.5A.73 applies in relation to the entity, in relation to the transaction or position, during a particular period, and the period has ended (at the exemption end time ) ; and

(b) the entity is a counterparty to the relevant OTC derivative (including the derivative as modified) at the exemption end time; and

(c) in reliance on an exemption under regulation 7.5A.71 (the applicable exemption ), the entity does not report OTC derivative position information (the exempt information ) in relation to the transaction or position during that period; and

(d) if it were not for the applicable exemption, the entity would have been required to report the exempt information under:

(i) the Derivative Transaction Rules (Reporting); or

(ii) subsection 907D(3) of the Act, in relation to a provision of the ASIC exemption instrument that imposes a requirement, as a condition of an exemption under that instrument, to report that information.

Single-sided reporting requirement

(2) Despite the applicable exemption, the entity must report OTC derivative position information in relation to the OTC derivative, as at the exemption end time, in accordance with the Derivative Transaction Rules (Reporting), within 6 months after the exemption end time.

(3) If the entity fails to comply with subregulation (2), the applicable exemption is taken never to have applied to the entity in relation to the transaction or position.

Part 3   Application

Corporations Regulations 2001

7   After Part 10.20

Insert in its appropriate numerical position:

Part 10.21 - Application provisions relating to the Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulation 2015

10.21.01 First application of 7.5A.73 - existing phase 3 reporting entities

Main rule

(1) Subject to subregulations (2) and (3), for the purposes of regulations 7.5A.71 and 7.5A.72, regulation 7.5A.73 first applies to an entity that was a phase 3 reporting entity on 30 September 2015, in relation to an OTC derivative transaction or an OTC derivative position, at all times during a period:

(a) starting on 1 October 2015; and

(b) ending at the end of the quarter day that next follows 2 successive disqualifying quarter days for the entity, counting disqualifying quarter days on or after 30 June 2015.

Entities with disqualifying quarter days on 31 March 2015 and 30 June 2015

(2) Subregulation (3) applies in relation to an entity that was a phase 3 reporting entity on 30 September 2015, if:

(a) the entity became a phase 3 reporting entity on or before 31 March 2015; and

(b) 31 March 2015 and 30 June 2015 were disqualifying quarter days for the entity.

(3) For the purposes of regulations 7.5A.71 and 7.5A.72, regulation 7.5A.73 first applies to the entity, in relation to an OTC derivative transaction or an OTC derivative position, at all times during a period:

(a) starting on the day after the quarter day that next follows 2 successive qualifying quarter days for the entity, counting qualifying quarter days on or after 30 September 2015; and

(b) ending at the end of the quarter day that next follows 2 successive disqualifying quarter days for the entity.

Interpretation

(4) A term used in this regulation has the same meaning as in regulation 7.5A.73.

Part 4   Amendments relating to notifiable instruments

Corporations Regulations 2001

8   Subregulation 7.5A.63(4)

Omit "in writing", substitute "by notifiable instrument".

9   Subregulation 7.5A.63(5)

Repeal the subsection.