ASIC Brings Full Lifecycle Derivative Reporting to CFDs

CFDs are the focus of new announced changes from ASIC to their Derivative Reporting regulation (link to announcement). The change will make it mandatory starting from July 1st, 2019, for brokers and other investment firms to report the full lifecycle of all CFD trades.

As part of the ASIC derivative reporting regulation, investment firms are required to report details of their derivative trades. The regulation is similar to that of EMIR in the EU (more on EMIR). One big difference is that ASIC allowed for firms to either report all their derivative trades or a snapshot of end of day positions.

The snapshot report allows companies to exclude from their daily reports any intraday trades that had been opened and closed on the same day. CFD brokers have been primary beneficiaries of the snapshot reporting as it allows for them to reduce their overall report load and potentially costs associated with submissions to a Trade Repository.

With the update from ASIC, the regulator has announced that they are excluding OTC derivatives from being allowed to be reported on a snapshot basic. Included under OTC Derivatives are equity derivatives, CFDs, Margin FX trades and any CFD-like products. CFD brokers will now have to report the full lifecycle of all CFD and FX trades taking place on their systems, regardless of whether it is an intraday position.

Also being impacted are brokers and banks with equity derivative businesses. While many larger firms currently report their full lifecyle for all trades, many smaller ones have been relying on the snapshot approach for their equity derivative trades. The new requirements now force firms to not only have to report more trades, but also put in place systems to gather intraday day to be reported compared to the simpler snapshot approach.

The regulatory update from ASIC comes as there has been talk within the industry that this would take place. However, until now there was no firm timetable on the change.

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Ron Finberg
About the author: Ron Finberg
Ron is a Regulatory Product Specialist at Cappitech and supports customers in their compliance of MAS OTC reporting, SFTR, EMIR, MIFID II and ASIC derivative reporting.