The Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS) have entered into a Memorandum of Understanding (MOU) to allow trade repositories licensed in one jurisdiction to provide relevant data to the authority in the other jurisdiction, demonstrating Australia’s prominence as a both a trade partner of Asia Pacific nations with strong financial markets presence such as Singapore and Hong Kong, as well as the country’s pledge toward playing its part in establishing a global regulatory framework among the major FX industry participants.
Through this MOU, ASIC and MAS express their intent to cooperate with each other in the interest of fulfilling their respective responsibilities and mandates by facilitating each authority’s access to relevant trade repository data, while ensuring the confidentiality of the information is appropriately protected.
The MOU follows the licensing by ASIC of DTCC Data Repository (Singapore) Pte Ltd, a trade repository established and licensed in Singapore.
Whilst North American trade repositories have rallied to gain presence in London and serve British companies under the newly forged European Market Infrastructure Regulation (EMIR), Australia is sticking firmly to its Asian neighbors, which is a wise move considering Singapore’s cast-iron economic structure and vast institutional interbank FX sector. Additionally, western companies, in the light of economic downturns in the United Kingdom and United States, have turned their attention to Asia, with Australia being a prime location to establish new offices in order to serve a burgeoning client base from Hong Kong, Singapore, Malaysia and China.
In a joint statement, ASIC Chairman Greg Medcraft and MAS Deputy Managing Director (Financial Supervision) Ong Chong Tee said the signing of the MOU between ASIC and the MAS is a world first for this type of arrangement and embodied the ongoing close cooperation between ASIC and MAS on financial market issues, including the implementation of the Group of Twenty (G20) over-the-counter (OTC) derivatives reforms.
Australia has been a signatory on the IOSCO memoranding of understanding between all of the G20 nations since 2002, with its national perspective on legislative requirements for OTC derivatives having begun in January 2013 when ASIC began the implementation of reforms echoing those of other Western nations with a large OTC derivatives presence. At that time, the new Pt 7.5A of the Corporations Act 2001 (Corporations Act) became effective. Under Pt 7.5A, the government departments responsible have the power to prescribe certain classes of derivatives as being subject to an ASIC rule-making power for mandatory transaction reporting to a derivative trade repository, mandatory clearing by a central counterparty or mandatory execution on a trading platform.
A decision by the government minister responsible prescribing a class of derivatives under the framework will be based on advice from the Council of Financial Regulators (CFR). The CFR is comprised of ASIC, the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA).
ASIC has responsibility for implementing derivative transaction rules and derivative trade repository rules in Australia as part of Australia’s G20 OTC derivatives commitments.
Mr Medcraft said, “ASIC is committed to ensuring these important reforms are implemented in a way that minimises cost to Australian business and promotes the role of Australia as a financial centre, by making use of international infrastructure where possible.”
Mr Ong added, ‘This MOU is an important framework for ensuring that both MAS and ASIC would have appropriate access to relevant data in their respective licensed trade repositories, whether such trade repositories are located in Singapore or Australia. This reflects MAS’ strong support for the effective implementation of OTC derivatives trade reporting reforms in Singapore and other jurisdictions in the region, including Australia, as part of ongoing global efforts to enhance transparency and to reduce systemic risk in the OTC derivatives markets.’
To read the full announcement, click here.