SFTR About

ABOUT SFTR

WHAT IS SFTR?

The Securities Finance Transaction Regulation (SFTR) aims to reduce risks by improving transparency in securities financing markets and forms part of the EU’s response to the policy proposals issued by the Financial Stability Board (FSB) in August 2013. It will require counterparties to report details on trades and collateral (including reuse) to a registered trade repository (TR). Managers of UCITS and AIFs are also required to disclose the details of the use they make of SFTs and total return swaps.

The European Securities and Markets Authority (ESMA) issued its final report on the technical standards for SFTR on March 31, 2017, and the European Commission adopted the RTS & ITS on December 13th 2018, leading to a projected live date of Q2 2020. The report details a total of 153 reportable fields covering securities lending, repo, buy/sell-back and margin lending.

WHAT CHALLENGES WILL MARKET PARTICIPANTS FACE WITH SFTR?

Although the European Commission has adopted the RTS & ITS, the date of entry into force for the RTS remains a subject of debate. Nevertheless, what is certain is that the main challenge for market participants will revolve around the content and timing of the reporting requirements for trades and collateral. The reporting requirement is dual-sided and requires the provision of a unique transaction identifier (UTI) for each trade and a legal entity identifier (LEI) for the counterparts in the trade.

A mandatory reporting format has been proposed, which would require the inclusion of a comprehensive series of details throughout the lifecycle of the trade. Market participants will be confronted by the need to track, manage and report a large volume of data, some of which may be captured by upstream or downstream systems, creating a potentially costly requirement to upgrade current systems or build out to external sources.

 

HOW IS EQUILEND IMPLEMENTING ITS SFTR SOLUTION?

We are working in partnership with Trax and in concert with industry bodies, clients, tri-party agents and TRs to provide an automated, consolidated, scalable solution that removes the necessity for manually intensive intervention from clients and provides transparency throughout the process.

CHALLENGES & CONSIDERATIONS FOR MARKET PARTICIPANTS

News

A Day in the Life (Securities Lending Times) How the joint EquiLend/Trax solution can streamline SFTR reporting - October 2018

Is Time Running Out? (Securities Lending Times) Why there needs to be a focus on how your vendors support you - October 2018

SFTR Activity Ramps Up (Markets Media) August 10, 2018

REGIS-TR to Collaborate With EquiLend and Trax on SFTR Reporting Solutions - August 2, 2018

DTCC Collaborates with EquiLend & Trax to Advance Securities Financing Transaction Reporting Processes - June 5, 2018

EquiLend & Trax on SFTR (Securities Lending Times) - May 15, 2018

EquiLend and Trax to Launch Interoperable Front-to-Back SFTR Offering - September 20, 2017