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The ASIC Nexus Test Is Now Live: What Foreign Entities Must Do in 2026
The October 2025 deadline has passed. Here’s what changed, who it affects, and what your firm needs to have in place right now.
ASIC’s overhaul of its derivative reporting regime is entering its final, critical stage.
What Changed on 20 October 2025ASIC’s overhaul of its derivative reporting regime reached its final, critical stage on 20 October 2025. Two interconnected changes came into force simultaneously, fundamentally altering how foreign entities determine and fulfil their Australian reporting obligations.The changes were implemented through the ASIC Derivative Transaction Rules (Reporting and Clearing) Amendment Instrument 2024/416:
- Alternative reporting was abolished. The long-standing mechanism that allowed foreign entities to satisfy Australian reporting obligations by reporting to an overseas trade repository, so-called substituted compliance was permanently removed. The foreign entity exception previously found in Rule 2.2.1(3) of the 2024 Rules no longer exists. The list of foreign repositories that could previously be used for this purpose (RG 251.19) has also been de-prescribed.
- The Nexus Derivative test replaced the “entered into in Australia” criterion. The ambiguous prior test has been replaced with a clearer, function-based test that definitively determines whether a transaction is reportable to an Australian-licensed trade repository.
If your firm was relying on alternative reporting before October 2025, that pathway is now closed. There is no legal mechanism remaining to satisfy an Australian reporting obligation by submitting to a foreign TR. All reportable transactions and positions must go directly to an ASIC-licensed trade repository either DTCC Data Repository (Singapore) Pte Ltd (DDRS) or KOR Reporting Inc.
Understanding the Nexus Test in 2026
The Nexus Test focuses on where key functions related to a derivative transaction are actually performed, not where the legal entity is registered. If any one of the following functions is performed by a person located in Australia, the transaction is a “Nexus Derivative” and is in scope for ASIC reporting:
1. Determining the price or economic terms of the transaction
2. Offering to enter into the transaction
3. Agreeing to enter into the transaction
4. Managing the financial risk arising from the transaction
How the Nexus Test Captures Offshore Entities
The Nexus Test was specifically designed to look beyond legal entity registration and focus on where a business’s key functions are actually performed. This has significant implications for CFD brokers and other foreign entities with offshore booking structures.
A common scenario playing out right now:
A foreign entity registered in Vanuatu, Seychelles, or Mauritius enters into transactions with wholesale clients papered to that offshore entity. However, the broker’s trading desk or risk management team, who are responsible for hedging and managing the financial risk of those positions is based in Sydney.
Under the Nexus Test, because the risk management function is performed by Australian-based staff, every one of those transactions is a Nexus Derivative. They must be reported directly to an ASIC-licensed trade repository. The offshore booking structure is no longer a shield.This applies even to entities without an Australian Financial Services Licence (AFSL). The rules apply to any entity that is a “Reporting Entity” as defined in the ASIC Derivative Transaction Rules, provided it is a counterparty to a Nexus Derivative.
What This Means for Your Compliance Framework Right Now
If your firm had any connection to alternative reporting prior to October 2025, or if you operate with offshore booking structures and Australian-based functions, the practical implications are immediate:
You need a direct reporting flow to an ASIC-licensed TR. If you don’t have one established, you are likely already in breach. ASIC has made clear that the responsibility for data completeness rests with the reporting entity, even when reporting functions are delegated.
Your operational footprint needs to be mapped against the Nexus Test. Where are your pricing, execution, and risk management functions actually performed? If any are in Australia, those transactions are in scope, full stop
Delegated reporting doesn’t transfer liability. Even if you outsource your reporting to a third party, you remain responsible for the accuracy and completeness of what gets submitted. The removal of the safe harbour for delegated reporting was an explicit policy decision by ASIC to raise accountability at the entity level.
Your data quality obligations have also increased. The 2024 Rules introduced significantly higher data granularity requirements. More fields, stricter validation, ISO 20022 messaging standards. If your reporting infrastructure was built around the older rules, it likely needs assessment.
ASIC’s Direction of Travel
The progression from the 2013 rules, through 2022, and into the 2024 framework reflects a deliberate and accelerating trend: greater domestic oversight, higher data quality expectations, and direct accountability placed firmly on reporting entities regardless of operational structure or jurisdictional complexity.
The removal of alternative reporting and the introduction of the Nexus Test are not isolated amendments. They represent ASIC closing the gaps that allowed foreign-connected entities to avoid Australian reporting obligations through structural arrangements. Firms that treated compliance as a box-ticking exercise under the old regime will find the new framework far less forgiving.
Is Your Firm Positioned Correctly?
The October 2025 changes have now been in force for several months. If you haven’t already conducted a thorough review of your reporting obligations under the new rules, the window for a proactive approach is narrowing.
At Resolve DTR, we help firms assess their obligations under the Nexus Test, establish or remediate direct reporting flows, and build defensible compliance frameworks that hold up to ASIC scrutiny. Our service is built on the KOR Financial platform, one of only two ASIC-licensed trade repositories, providing a transparent, auditable, end-to-end reporting solution.
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