Draft Regulation for Reporting Obligations under the Financial Markets Act
On 20 April 2017 the Registrar of Securities Services published the second draft of the regulations relating to the reporting of over-the-counter derivatives transactions in terms of Section 58 of the Financial Markets Act. The comment period for these draft regulations closed in mid-May.
The main aim of the reporting obligations is to create transparency in a previously opaque market, and allow the regulators sight of the OTC derivatives trades, which are being done in the market. This initiative will assist the regulator in monitoring systemic risk and risk concentrations.
The second draft of the trade reporting requirements include the following main provisions:
Reporting obligations will apply to OTC derivative providers and central counterparties (clearing houses). If two OTC derivative providers transact, they should agree between themselves who will bear the reporting obligation. The reporting obligation may be delegated to a third party.
The following asset classes will need to be reported:
Equity derivatives, and
Interest rate derivatives.
The report should contain transaction level data and should also include collateral data relating to that transaction. This is in line with what the European Market Infrastructure Regulations (EMIR) require.
Reports should be submitted before the end of the business day following the execution date of the trade. Again this is in line with what EMIR requires.
Reporting parties will be identified using their Legal Entity Identification numbers (LEI numbers).
The reporting obligation will apply to central clearing houses or OTC derivative providers 6 months after the date of publication of the final rules.
There is an 18-month look back period. So trades entered into (which are still in force at the start of the reporting phase in date) will need to be reported within 180 days of the reporting obligation start date.
Transactions which are entered into within the 18-month look back period, but which conclude before the reporting requirement start date applies, will need to be reported within 5 years of the reporting start date.
Annexure A contains a template form of the trade report showing all the data, which has to be provided in the trade report.
Want to know more about the Financial Markets Act? Come along to our training session:
Johannesburg - Wednesday 16 August 2017
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Johannesburg - Thursday 17 August 2017