REG-INSIGHT

ASIC CP 387 Series

📊 Australia’s ASIC CP 387 Misconceptions: Is DEI a Multi-Condition Trigger for Daily Recalculations?

With the finalized rules following Consultation Paper 387 (CP 387) now set to take effect on December 4, 2026, market participants are racing to align their compliance monitoring systems. However, a common misconception has begun circulating across trading desks: that Deemed Economic Interest (DEI) acts as a multi-condition checklist to determine whether you need to recalculate your positions daily.

In reality, DEI is not a conditional “gatekeeper” test—and daily recalculation isn’t an optional routine triggered only under specific parameters.

📋Clearing Up the Mechanics: How DEI Actually Works

❌The Myth: DEI creates conditional triggers for daily monitoring

Some compliance interpretations suggested that daily recalculation was only required if a combination of conditions were met—such as holding a non-linear derivative, and operating within an active takeover window.

✅The Reality: DEI is a metric, not a condition

Under the statutory framework, DEI is simply the formula used to quantify your exposure (now fixed at full notional amount for derivatives). It tells you how much you hold, not when you should measure it.

🔍Key Takeaways for Position Monitoring

• 🔄 Daily Assessment is Continuous: The obligation to track substantial holdings applies continuously across trading days. You do not wait for a specific DEI “condition” to turn on daily tracking; your surveillance systems must monitor total aggregate exposure daily to catch threshold movements.
• 📐 Full Notional Simplifies (and Expands) the Baseline: Because ASIC removed the requirement for daily delta calculations, tracking DEI no longer requires dynamic option pricing re-valuations. However, because non-linear positions now count at 100% notional value, positions hit reporting thresholds much faster and stay there.
• ⏱️ The 2-Business-Day Clock: The moment your aggregate exposure—comprising direct equity, physically settled derivatives, and cash-settled DEI—crosses the 5% mark (or shifts by 1% thereafter), the statutory disclosure clock starts ticking.

📌The Bottom Line

Don’t confuse the calculation method (DEI) with the monitoring obligation (daily position tracking). Under the enhanced regime, daily tracking of your exposure is the baseline expectation, while DEI is simply the standard yardstick used to sum up your derivative positions. Automated screeners should be set to evaluate total notional positions continuously rather than waiting for specific market triggers to prompt a re-check.