Australia doubles down (under) on reporting
17 January 2017 Perth
Image: Shutterstock
The Australian Prudential Regulation Authority (APRA) is considering two new reporting standards for securities lending and repo transactions in order to maintain global regulatory parity.
The latest overhaul of the Australian market’s reported data comes in response to the Financial Stability Board’s recently published final recommendations on securities lending, as part of its review of risks threatening asset managers.
Of the two reporting forms being considered in APRA's discussion paper, the first option will collect transaction-level data on repos and securities lending activity for all positions outstanding at the end of the month, while the second collects aggregated data broken down along certain lines.
APRA noted that, during its industry consultations, most institutions indicated a strong preference for the first version, but, some reporting institutions are likely to find the second more straightforward.
For each repo, reverse repo, securities lending and borrowing position at the end of the month, entities with greater than a AUD 100 million (USD 75.4 million) of stock outstanding will be required to provide details on the characteristics of the loan and of the underlying collateral.
For securities lending activity, further aggregate information will be collected on the reinvestment of cash collateral, which cannot be reportable at a transaction level.
APRA has proposed an extended phasing in period for this new standard of reporting that will begin on 1 July 2018. Phase two and three will then begin on 1 January 2019 and 1 July 2019 respectively.
There will also be a parallel run period of 12 months where market participants will be required to report data on both the old and new forms in order to ensure continuity and data accuracy.
Under APRA’s existing reporting system, institutions are already reporting some data on repos and securities lending. The data is published by the RBA, which also runs a quarterly bond and repo survey.
APRA is open to industry comment on the proposals until 18 April.
The latest overhaul of the Australian market’s reported data comes in response to the Financial Stability Board’s recently published final recommendations on securities lending, as part of its review of risks threatening asset managers.
Of the two reporting forms being considered in APRA's discussion paper, the first option will collect transaction-level data on repos and securities lending activity for all positions outstanding at the end of the month, while the second collects aggregated data broken down along certain lines.
APRA noted that, during its industry consultations, most institutions indicated a strong preference for the first version, but, some reporting institutions are likely to find the second more straightforward.
For each repo, reverse repo, securities lending and borrowing position at the end of the month, entities with greater than a AUD 100 million (USD 75.4 million) of stock outstanding will be required to provide details on the characteristics of the loan and of the underlying collateral.
For securities lending activity, further aggregate information will be collected on the reinvestment of cash collateral, which cannot be reportable at a transaction level.
APRA has proposed an extended phasing in period for this new standard of reporting that will begin on 1 July 2018. Phase two and three will then begin on 1 January 2019 and 1 July 2019 respectively.
There will also be a parallel run period of 12 months where market participants will be required to report data on both the old and new forms in order to ensure continuity and data accuracy.
Under APRA’s existing reporting system, institutions are already reporting some data on repos and securities lending. The data is published by the RBA, which also runs a quarterly bond and repo survey.
APRA is open to industry comment on the proposals until 18 April.
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