Industry Mulls SFTR Reporting
The MiFID II regulations only went into force last month in the European Union but financial firms are already having to think about additional reporting requirements from more regulation.
The EU’s Securities Financing Transactions Regulation (SFTR) requires all counterparties to report securities financing transactions to authorised trade repositories where national regulators have direct and immediate data access. The European Commission is due to approve the final regulation this quarter and most market participants expect SFTR to go live in the second quarter of next year.
Tom Carey, head of Broadridge International, told Markets Media the clients have realised that a fragmented approach to implementing regulation is inefficient as SFTR and other changes are on the horizon. Last month US-headquartered Broadridge Financial Solutions announced the creation of Broadridge International, as the capital markets technology provider expands in Europe, Middle East and Africa and Asia Pacific.
“Last year was the year of MiFID II compliance,” Carey added. “Over 2018 and 2019 clients will be looking at their technology platforms and solutions to reduce costs, gain scale and increase transparency.”
Broadridge implemented a trade and transaction reporting platform for MiFID II which Carey said has about 20 clients. He expects more to join during the first half of this year as the regulators allowed a six-month reprieve in obtaining legal entity identifiers for all their clients in order for them to be allowed to trade in the EU.
NEX Regulatory Reporting announced last week that it has partnered with consultancy Delta Capita to offer specialist advice to clients ahead of SFTR coming into effect.
In November last year NEX Regulatory Reporting said it intends to become an SFTR trade repository and launch a dedicated reporting solution, pending the issuance of the final technical standards from the European Securities and Markets Authority.
Collin Coleman, head of NEX Regulatory Reporting, said in a statement: “SFTR will require clients to report an unprecedented level of data given that many securities and finance transactions have significant durations, complex lifecycle events and diverse collateral options.”
Carey said regulatory change was one of the drivers for a significant uptick in interest in Broadridge across Europe in the past three to four years, in addition to clients looking to reduce costs and increase transparency.
Tim Gokey, president and chief operating officer of Broadridge, said in a statement: “International expansion is a core strategy for Broadridge and this new strategic focus will enhance our long-term commitment to supporting our international and North American clients as we increase our capabilities to deliver more globally integrated solutions to address the challenges clients face today and tomorrow.”
Prior to his new role Carey was head of Broadridge’s technology and operations solutions business in EMEA and Asia Pacific. His new role will include increasing the international adoption of existing Broadridge products, launching new international products and acquiring relevant companies.
Carey told Markets Media that clients want to centralise all their data. “One global client has eight platforms which they want integrated into one,” he added. “They can reduce cost and also increase control, which is becoming increasingly important.”
He believes the biggest opportunity in capital markets is in post-trade, which is still fragmented and in many cases, using old technology.
“Cost cutting within firms’ four walls is exhausted as they have reduced headcount and off-shored,” Carey added. “The drumbeat is mutualising the costs of change and rationalising market infrastructure.”
Last month Broadridge announced the launch of Repo Order Quote which is now being used by a large European bank.
Repo Order Quote allows traders to view liquidity and pricing across multiple electronic marketplaces and gives them the ability to quote and execute on an aggregate basis.
Jerry Friedhoff, head of Broadridge’s securities finance and collateral management business, said in a statement: “ROQ also enables repo desks to automate their trading activities via our unique combination of algorithmic execution and global inventory.”
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The analysis is based on transactions publicly reported by 30 European APAs and venues.
A similar service is available on the BIDS platform in the US equity market.