Document ID: chunk:federal_register_of_legislation:F2022L01578:front:0:p17
Version: federal_register_of_legislation:F2022L01578
Segment Type: other
Provision Reference: 
Character Range: 45050–48424

74.         An APRA covered entity entering into a non-centrally cleared derivative transaction with a covered counterparty must, at a minimum, apply the risk mitigation standards outlined in paragraphs 75 to 95 of this Prudential Standard.

Trading relationship documentation
75.         An APRA covered entity must establish and implement policies and procedures to execute written trading relationship documentation[25] with a covered counterparty prior to or contemporaneously with executing a non-centrally cleared derivative transaction.
76.         The trading relationship documentation must:
(a)          promote legal certainty for non-centrally cleared derivative transactions;
(b)          include all material rights and obligations of the counterparties concerning the non-centrally cleared derivative trading relationship that have been agreed between them; and
(c)          be executed in writing or through equivalent non-rewritable, non-erasable electronic means.
77.         An APRA covered entity must have policies and procedures to maintain trading relationship documentation for a reasonable period of time after the maturity of any outstanding transactions with a covered counterparty and such documentation must be made available to APRA upon request.

Trade confirmation
78.         An APRA covered entity must establish and implement policies and procedures designed to ensure the material terms of all non-centrally cleared derivative transactions[26] with a covered counterparty are confirmed as soon as practicable after execution of the transaction. Material terms must include terms necessary to promote legal certainty to the transaction including incorporating by reference the trading relationship documentation.
79.         An APRA covered entity must establish and implement policies and procedures designed to confirm material changes to the legal terms or the rights and obligations under transactions.
80.         Confirmations must be executed in writing through non-rewritable, non-erasable automated methods where it is reasonably practicable for the relevant counterparties to the transaction to do so. In all other cases, confirmation must be executed in writing via non-rewritable, non-erasable electronic or manual means.

Portfolio reconciliation
81.         An APRA covered entity must establish and implement policies and procedures designed to ensure that the material terms and valuations of all transactions in a non-centrally cleared derivatives portfolio are reconciled with covered counterparties at regular intervals.
82.         The policies and procedures must be designed to ensure the process or method of portfolio reconciliation is agreed upon with its counterparties and designed to:
(a)          ensure an accurate record of material terms and valuations of the non-centrally cleared derivatives transactions in the portfolio; and
(b)          identify and resolve discrepancies in the material terms and valuations in a timely manner.
83.         An APRA covered entity must conduct portfolio reconciliation with a scope and frequency that reflects:
(a)          the nature and extent of its non-centrally cleared derivative activity;
(b)          the materiality and complexity of the risks it faces;
(c)          global regulatory standards imposed on similar institutions for similar transactions; and
(d)