SFTR Reporting

The Securities Financing Transactions Regulation (SFTR) is part of the EU implementation to enhance the transparency of the securities financing markets (FSB’s “Strengthening Oversight and Regulation of Shadow Banking”) and the financial system in general. The regulation requires financial and nonfinancial counterparties to report their Securities Financing Transactions (SFTs) to authorized SFTR Trade Repositories (TR) for direct and immediate data access to National Competent Authorities (NCA). Similar to EMIR, the transaction details need to be reported no later than the following working day.

• STP affirmation and confirmation from point of execution on CME markets using BrokerTec
• Leverage our 2,000+ client network to manage and share UTIs
• Reconcile and manage your trade and portfolio exposures, margin and collateral with your counterparty network in triResolve
• Exception based workflow allows for streamlined investigation and collaboration across teams internally and externally with your counterparties
• Reconcile the full trade lifecycle for transparency and accuracy with triResolve 
• Dedicated service delivery team with a global support coverage model
• Automatic highlighting of breaks and tolerance breaches across counterparty network, including cash flows with the settlements teams
• Cross-regime reporting validation using the triResolve Repository module allows firms to ensure accuracy of trades reported against their own. Applies to self and/or delegated reporting

SFTR reporting structure is akin to EMIR in several areas, specifically: each counterparty to the transaction has a reporting obligation to approved TRs; the European Securities and Markets Authorities (ESMA) applies registration requirements for TRs; and the establishment for NCA access to data. 

The EU regulation has three key requirements – reporting, transparency, and reuse of collateral:

Reporting. SFTR defines reportable transactions:

• Repurchase transaction;
• Securities lending and/or borrowing;
• Buy-sell back transaction or sell-buy back transaction;
• Margin lending transaction; and
• Commodities lending and borrowing

Transparency towards investor.

SFTR includes disclosure requirements by UCITS funds and AIFMs on their use of SFTs and certain total return swaps in their prospectuses and periodic reports.

Reuse of collateral.

Transparency conditions in relation to the reuse of collateral, such as prior risk disclosure to counterparties and obtaining written consent prior to the hypothecation or reuse of assets.

SFTR key dates:

On 19 March, ESMA issued a statement that in effect delayed the start of the SFTR reporting obligations on credit institutions and investment firms until 13 July. The statement was updated on 26 March to provide additional clarity. 

Phased go-live process for firms’ new trade reporting obligations:

• April 2020: Credit institutions and investment firms
• July 2020: Central Counterparties (CCPs) and Central Securities Depositories (CSDs)
• October 2020: Insurance firms, UCITS funds, alternative investment funds, pension funds
• January 2021: Non-financial entities

Getting ready for implementation

Now is the time to find and put into process an efficient operating model to manage the new requirements. Firms must identify in-scope entities for reporting obligations and consider:

• The systems needed to identify in-scope transactions
• Counterparty classification processes required to identify SME counterparties (and any information necessary from them in order to report on their behalf)
• Available trade repositories, sign-up processes and technical access requirements
• Required data sources and processes, including sources for LEIs, ISINs and UTIs
• Implementation of record-keeping from in-force date

Alignment of data through proactive reconciliation against the counterparties and the trade repositories