RegsWeb 02 April – Risk, OTC update, Cyber, Tipping Off

Inadequate risk management systems for futures market participants

ASIC’s recent observations indicate many firms are failing to implement adequate risk limits, under Part 2.2 of the ASIC Market Integrity Rules (Futures Markets) 2017. The rules mandate the establishment and documentation of pre-determined order and position limits for both client and house accounts. ASIC emphasises the need for robust order systems with limit-setting and order rejection capabilities, and processes for ongoing assessment and adjustment of these limits. Read more here.

Policies affected: Trading or Operational Risk related policies

Organisations affected: Futures Market Participants

Updated technical guidance for OTC derivative transaction reporting

ASIC has released updated technical guidance for OTC derivative transaction reporting under the ASIC Derivative Transaction Rules (Reporting) 2024. This update reflects the correct creation of Unique Product Identifier (UPI) codes, the handling of back-dated reporting for effective dates and event timestamps, and specific requirements for block trade reporting. Read more here.

Policies affected: OTC Reporting policies and procedures

Organisations affected: OTC Operators

Strengthening cyber risk management in market operations

ASIC is emphasising the critical need for market participants to strengthen their cyber security frameworks due to the escalating threat of sophisticated cyber crime. Key areas of focus include identifying and protecting critical assets, implementing strong incident detection and response mechanisms, managing third-party risks effectively, developing resilience and recovery plans, and ensuring comprehensive cyber awareness and training for staff. Read more here.

Policies affected: Cyber Security policies and procedures

Organisations affected: Market Participants

Change to Tipping Off Provisions effective

Changes to Australia’s AML/CTF “tipping off” reforms take effect from 31 March 2025. The core change is that disclosures are prohibited when they “would or could reasonably be expected to prejudice an investigation.” This means it’s about the potential harm to an investigation. Read more here.

Policies affected: AML/CTF Program 

Organisations affected:  AUSTRAC reporting entities