ASIC’s CFD review sends a clear warning on regulatory reporting quality

Regulatory reporting lessons from ASIC’s CFD report

ASIC’s review of the contracts for difference (CFD) sector makes one thing very clear: transaction reporting data is now a frontline supervisory and enforcement tool.

Risky business: Driving change in CFD issuers’ distribution practices (Report 828) focuses on CFDs in Australia but it contains crucial insights for the global derivatives market: regulators are reviewing reported data to assess conduct, governance and control frameworks, not just compliance with the reporting rules.

70 million errors: what ASIC’s findings tell us

The report details ASIC’s findings of a sector-wide review of CFD issuers’ distribution practices and compliance measures conducted between October 2024 and December 2025. Among the compliance issues identified, substandard OTC derivatives transaction reporting stood out, with over 70 million erroneous reports. While the review focused on CFDs, the reporting deficiencies identified can affect all derivative products.

ASIC categorised the failures into two categories:

1. Poor data quality and missing reportable information

• Missing Data: Unwind payments, under-reported derivatives and collateral info
• Inaccurate data: Incorrect Action and Event type combinations, erroneous timestamps, prices, valuations and collateral
• Abnormal values: Notional amounts exceeding hundreds of millions of dollars

These are all errors that we here at Kaizen find in our quality assurance testing.  At scale they undermine the regulators’ ability to understanding market activity and identify emerging risks within the market.

2. Inadequate oversight and governance

• Minimal or no oversight of delegated reporting arrangements: No systematic way of knowing when third parties faced system issues or anomalies that may cause misreporting
• Data scrutiny: No processes in place to review data quality before and after submission to trade repository

The positive outlier

Amid the widespread failures, one reporting entity stood out by consistently reporting high-quality data with no identifiable errors. This was achieved through regular collaboration with peers, close adherence to oversight guidance for delegated reporting arrangements, and systematic reconciliations between trade repository and source systems.

ASIC’s spotlight on these practices signals that reporting entities can achieve exemplary reporting quality by implementing effective controls and governance for both in-house and delegated reporting arrangements, including:

• Data quality checks: Detect abnormalities such as unusually large notionals, valuations, and inaccurate or missing collateral data
• Trade and position reconciliations: Identify discrepancies between source systems and trade repository records, including over or under-reporting
• Exceptions monitoring and resolution: Tracking, prioritising and resolving issues identified through data quality checks and reconciliations

These practices reflect an organisational culture where data quality is prioritised, controls are embedded, and issues are identified and resolved proactively, pointing to a mature governance framework.

The wider implications

The October 2024 ASIC rules rewrite represented a fundamental change in how transaction data supports regulatory oversight. Control over data quality and reconciliations aren’t extraordinary measures; they’re baseline practices for entities that take reporting seriously.

The message from ASIC’s report extends far beyond CFDs and Australian markets. As regulators globally gain experience with years of accumulated reporting data, they will be using that data for conduct reviews, enforcement actions, and assessments of firms’ control environments. The report’s title says it all: treating reporting quality as an afterthought is risky business. The question isn’t whether your regulator will scrutinise your reported data – it’s when.

How Kaizen can help

ASIC’s findings highlight a clear expectation that firms must be able to demonstrate effective assurance, controls and oversight over their regulatory reporting, including delegated arrangements.

Kaizen supports firms globally with independent regulatory reporting quality assurance, helping them identify gaps in controls, strengthen governance and evidence reporting quality before issues surface with regulators. Contact us for a conversation about how we can help you.