The Australian Securities and Investments Commission (ASIC) is seeking feedback on new derivative data standards that may have implications for investment firms across the Asia-Pacific region.
In the second of its consultation papers on the issue, the Australian regulator lays out plans to harmonise complex derivative trading processes with emerging global technical standards.
The 229-page ‘Proposed changes to simplify the ASIC Derivative Transaction Rules (Reporting)’ paper would “impact buy-side and sell-side firms in APAC with trade reporting obligations under the ASIC regulation”, according to a release from US-headquartered investment back-office monolith, DTCC.
Priya Kundamal, DTCC Singapore data repository head, said ASIC was “taking the lead in the APAC region to advance global data harmonization efforts that are critical in enabling cross-border data aggregation and in achieving systemic risk mitigation across global jurisdictions”.
“Crucially, this includes incorporating critical data elements (CDEs) within the core reporting data framework, adopting common global identifiers, such as the legal entity identifier (LEI), the unique product identifier (UPI) and the unique transaction identifier (UTI), and aligning to the ISO 20022 technical format and data standards,” Kundamal said.
Despite the arcane nature of the ASIC consultation, the outcome may require investment firms across the region – including NZ – to adapt to the Australian system as the new trading rules come into play.
“International standards have been developed for entity identifiers, transaction identifiers, product identifiers and critical data elements for transaction terms and valuation and collateral information for use in derivative transaction reporting,” the latest ASIC paper says. “Several overseas regulators have made proposals and/or finalised rules to implement these standards.”
Kundamal said applying consistent data rules for derivatives trading across the world would provide clearer oversight of systemic risks and improve operational efficiencies.
“The global rewriting of reporting rules marks the ongoing evolution of OTC [over-the-counter] derivative reporting to fulfill the G20’s objective of containing cascading risks. DTCC is actively engaging with regulators, across the globe and specifically in APAC to stress the importance of standardizing and harmonizing trade reporting rules,” she said. “This will also enable the efficient capturing and sharing of reported data and simplify implementation burdens downstream.
ASIC addressed questions around the “structure, scope and operation” of the mooted derivatives rules in its first paper before presenting more detailed proposals in the current consultation.
“We intend to issue a third consultation paper in Q4 2022 covering the rest of the issues,” the regulator warned.