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    APRA Finalizes Reporting Standard for Data Collection on Derivatives

    November 18, 2019

    APRA finalized the reporting standard ARS 722.0 on data collection for derivatives. ARS 722.0 will be used to collect quarterly data on the derivatives activity of authorized deposit-taking institutions and registered financial corporations. Also amended was the Reporting Practice Guide 701.0 on Australian Bureau of Statistics/Reserve Bank of Australia (ABS/RBA) reporting concepts for the Economic and Financial Statistics (EFS) collection. Additionally, APRA released its response to the comments received on the proposed changes to ARS 722.0. The first reporting period for ARS 722.0 will be for the quarter ending September 30, 2020. The new approach to ARS 722.0 will provide greater certainty about reporting obligations and will reduce reporting burden for most financial-sector entities.

    ARS 722.0 is designed to meet the international and domestic reporting requirements as prescribed by the 2008 System of National Accounts (SNA08) and Balance of Payments Manual (BPM6). These statistical frameworks require reporting of derivatives as financial instruments in their own right, which does not align with Australian Accounting Standards Board (AASB) reporting. As per the requirements, trades between domestic book entities and related parties should be reported along with external counterparty trades on ARS 722.0. Derivatives with resident and non-resident related parties (for example, an offshore branch) should be included, but trades within domestic book entity desks and same-sector resident related parties should be excluded. The guidance will be updated to clarify the treatment of related party transactions. ARS 722.0 reporting will be on a best endeavors basis for the first two reporting periods ending September 30, 2020 and December 30, 2020. Post that, reporting period ending March 31, 2021 onward, ARS 722.0 will be included in the scope of RPG 702.0.

    RBA, ABS, and APRA had commenced consultation on the EFS data collection in January 2017. The consultation package included 21 reporting standards, including ARS 722.0. In their August 2017 response to submissions, APRA and the agencies stated that they would consider derivatives reporting further and consult at a later date. In March 2019, ABS, RBA, and APRA had released an updated version of ARS 722.0 and reporting guidance for consultation. The updates included the movement of the derivatives reporting section of ABS Survey of International Investment to ARS 722.0. They also made various changes to the reporting form to reflect specific points of feedback on the reporting form and instructions.

    The copy of ARS 722.0 that was released for consultation in March 2019 contained these classification for derivative instruments: options, forwards, swaps, and any other instrument types not reported above, excluding futures. Two submissions noted that this classification may create ambiguity as some instruments may be reported under multiple categories. Instruments such as swaps, which combine forwards and other instruments, could be reported under swaps or separately as the component types. APRA and the agencies acknowledge this ambiguity and have added additional reporting guidance, including providing further examples in Reporting Practice Guide RPG 701.0 ABS/RBA Reporting Concepts for the EFS Collection (RPG 701.0).

     

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    Keywords: Asia Pacific, Australia, Banking, Securities, EFS Collection, RPG 701, ARS 722, Responses to Consultation, Reporting, Derivatives, APRA

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