European banks are whistling past the graveyard regarding their preparedness for the Securities Financing Transaction Regulation’s March 2020 deadline, according to recent polls.

For a project that many in the industry have described as more difficult than EMIR and MiFID II put together, only about half of the banks, 48%, surveyed by global consultancy Luxoft earlier this year have completed their cost-benefit analysis for the project.

Nearly 98% of the 331 banks polled responded that they were confident or very confident they would be ready.

“Yet, 76% of them do not have a trade repository in place or do not know whom they are going to use and whether they are going to build their systems internally or use a third-party provider,” said Geoff Hutton, EMEA regulatory specialist at Luxoft, during a recent webinar hosted by the London Stock Exchange Group’s UnaVista business.

When the same question was asked of the webinar’s audience, 27% of the audience was very confident in meeting the deadline, 54% were confident, and 18% were not confident at all.

“There is a large portion that is confident, but incredibly confident,” noted Marcus Jeffery, Global Head of Pre-Sales, Director, London Stock Exchange at UnaVista, and who moderated the panel.

“When identifying the required elements for SFTR reporting, many are realizing the overarching complexity of the field requirements,” he said. “Also, the need for effective reference data in support of the generation and validation of the reports the trade repository will process.”

Of the 155 data fields that SFTR requires firms to report, many will have no tolerance for deviation or slight tolerance at best.

“LEIs and UTIs will have no tolerances at all, and some of the economic fields will have very small tolerances, as the regulation currently stands,” said Steve Holland, product manager at UnaVista London Stock Exchange. “We’re talking one hour for time-related fields and 0.0005% for the principal field. That is about five pounds on a £ one-million principal trade.”

Preparing the front-, middle-, and back office systems will be a sizable task to which tier-one banks have allotted approximately $55 million for the project, according to Hutton.

“Although this is a large number, the confidence on that number is diluted because 48% of banks have performed the cost-benefit analysis,” he added. “It is quite hard to gauge where the spend will be.”

However, sourcing the talent for the project may be more complicated than acquiring the necessary funding.

Typically banks will hire contractors and domain-knowledge experts to handle projects like EMIR and SFTR, but the UK’s IR35 tax regulation could make it difficult for banks to hire the necessary contractors, said Hutton. “Certainly, it is interesting times.”