Our recent webinar with aosphere on Australia's incoming shareholding reforms drew one of our largest audiences yet, and one topic generated more questions than any other: deemed economic interest, and how the new calculation actually works.
It's a concept firms keep circling back to, and the one most likely to catch teams out.
Today, cash-settled derivatives (CFDs, cash-settled swaps, cash-settled options) sit mostly outside Australia's substantial holding disclosure regime. Because the holder has no contractual right to vote or dispose of the underlying shares, these positions generally don't create a "relevant interest", so they're invisible to the 5% substantial holding trigger and the 1% movement notices. The one narrow exception: if the parties have a separate agreement, arrangement or understanding about voting or disposal of shares the counterparty holds as a hedge, the derivative can already fall within scope today, but this is uncommon in standard cash-settled products.
From 4 December 2026, that gap formally closes. A new concept, "deemed economic interest", brings cash-settled positions into scope regardless of whether any such side agreement exists. And under the final rules in ASIC Instrument 2026/482, the calculation is simple: you count the full notional amount of shares the derivative references. No discounting for the fact you can't compel delivery, no probability weighting, just the raw number of underlying shares.
A fund holds a 4.9% shareholding in a listed company, under 5%, so no notice is currently required. It also holds a cash-settled swap referencing 3,000,000 shares (3% of the company), with no side agreement about voting or disposal.
Before, under the current rules, only the 4.9% shareholding matters. The swap is off the radar entirely, so no substantial holding notice is triggered, even though the fund's real economic exposure is closer to 7.9%.
After 4 December 2026, the swap creates a deemed economic interest in the full 3,000,000 shares. Aggregated with the 4.9% shareholding, the fund's disclosable position becomes 7.9%, crossing the 5% threshold and triggering an initial substantial holding notice, plus ongoing monitoring for further 1% movements.
Compliance teams can no longer treat derivative exposure as a side calculation. Every non-physically settleable derivative now adds its full underlying share count to the aggregation used for threshold and movement testing, meaning positions that were previously immaterial to disclosure can now push a holding over 5%, or trigger a movement notice, on their own.
The calculation is straightforward. Doing it by hand across a real book of positions is where it becomes unforgiving. It means recognising which derivatives are now in scope, converting each into its underlying share count, aggregating by issuer, and comparing the current position against the last disclosed one, continuously, as positions move.
That's the kind of monitoring systems quietly handle in the background, and the kind that becomes difficult to sustain manually at scale. It's exactly the problem the rest of this series will keep coming back to: the rules are clear enough, but staying on top of them is a data challenge before it's a compliance one.
For a fuller walkthrough, our webinar with aosphere is available to watch on demand. We covered why the reforms were needed and where the old framework fell short, how deemed economic interest brings derivatives into scope, the extension to foreign-listed entities, ASIC's expanded tracing powers and the tougher penalty regime. We also got practical: the calculation hotspots to watch, where filing deadline exposure sits, and how to assess your current Australian position before December. Watch it here: Australia's major shareholding reforms: Are you ready?