Trade Repository Reporting and Risk Mitigation Requirements for Over-the-Counter (OTC) Derivatives Contracts

Scope of Reporting 2. OTC derivative transactions that fall within the scope of “reportable transactions” described in paragraphs 3 to 7 below are required to be reported to the SAMA authorised Trade Repository Operator. 3. Reportable transactions are derivative transactions that meet the following criteria: a. The transaction is traded over-the-counter either non-cleared or cleared and novated to a central counterparty (CCP), excluding exchange-traded transactions; b. Reportable transactions include interest rate derivatives, a foreign exchange (FX) derivatives, equity derivatives, credit derivatives and commodity derivatives supported by the SAMA authorised Trade Repository; c. The transaction is conducted by a counterparty which is a licensed bank in Kingdom of Saudi Arabia (KSA) (in the case of a locally incorporated bank) or by its financial subsidiaries (including SPVs) or branches or a foreign bank branch licensed by SAMA in KSA d. The other counterparty to the transaction is: i. A licensed bank in KSA (in the case of a locally incorporated bank) or a KSA branch (in the case of a foreign bank); ii. A KSA or a foreign financial and non-financial counterparty; or iii. A CCP, if the OTC transaction is cleared though a CCP. 4. If a reportable transaction is, for example, entered into between a KSA branch of Bank X and the USA Head Office of Bank Y, Bank X falls within paragraph 3(c)while Bank Y falls within paragraph 3(d). The transaction is reportable by Bank X but not by Bank Y. If, however, the transaction is booked in KSA branch of Bank Y, reporting obligation rules must be applied to determine the reporting counterparty as per the single sided reporting obligation approach as mentioned in Appendix C . 5. The transactions referred to in paragraph 3(c) above include those that are booked in KSA office/branch of a licensed bank as a result of transfer of booking (i.e. through novation) of contracts entered into with external parties by the head office or overseas branches of the bank. If such novated transactions are reportable (i.e. the criteria set out in paragraph 3 above are also met after novation), the reporting bank should report the external counterparty (another licensed bank) who has originally entered into contract with the bank, instead of the office/branch from which the contract is transferred, as its counterparty to the transaction. 6. Reportable transactions do not include interbranch transactions (except those that fall within paragraph 4 above) and intra branch transactions (e.g. transactions between different desks of the treasury function). An interbranch transaction refers to a principal-to-principal transaction (or a back-to-back transaction) conducted between different branches of the same bank, including any transaction undertaken to transfer the risk of the transaction (or portfolio transactions) from one branch to another. 7. For the avoidance of doubt, reportable transactions: A. Exclude “spot” FX transactions, which refer in this context to FX transactions that are settled via an actual delivery of the relevant currencies within two business days; B. Exclude, from the perspective of a reporting bank, those transactions booked in its local or overseas subsidiaries (unless those subsidiaries are licensed banks and reporting criteria set out in these requirements are met, where in such case, they need to report to KSA TR regardless of their location); C. Include, in the case of reportable transactions which are novated for central clearing, those new transactions entered into by reporting banks with CCPs; and D. Exclude, transactions in which any of the following institutions participate as counterparty: i. The Government of the Kingdom of Saudi Arabia ii. SAMA iii. The Saudi Stock Exchange iv. A Supranational Authority v. Multilateral Development Banks