SFTR Reporting Has Smooth First Day
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has received reports from trade repositories (TRs) indicating that the first day of reporting by financial and no-financial market participants under the Securities Financing Transactions Regulation (SFTR), has gone smoothly.
Today, all four TRs opened their systems and start receiving and processing SFT data submitted by reporting firms. ESMA has not identified any major disruptions so far in the functioning of TRs. Over the coming days it will continue to monitor the availability of TR systems and data to both reporting firms and authorities.
ESMA will continue to engage with market participants to clarify any remaining issues and will assess the need for further supervisory convergence measures to facilitate compliance with the new reporting requirements.
The focus of ESMA’s supervision will be on ensuring the availability of TR systems as well as resolving shortcomings in the quality of data provided by reporting entities to TRs. As with any new reporting regime ESMA expects that issues will be identified in the first months following go-live, in particular as reporting systems continue to be improved and stabilised.
A framework, implemented by ESMA, for monitoring and enhancing the quality of data available to NCAs, central banks and other authorities entitled to access transaction data under SFTR. ESMA will supervise the implementation of any corrective and/or remediation measures by TRs as well as coordinating targeted actions by NCAs towards reporting entities.
SIX launches fully delegated SFTR reporting for Swiss Repo Market
Complex reporting obligations resulting from the Securities Finance Transaction Regulation (SFTR) can be fully delegated to the Swiss Stock Exchange. With the Collateral Cockpit™, launched in 2019 by the Swiss Stock Exchange, manages the cumbersome process on behalf of financial institutions. The service offers scale benefits for resource strained organizations at a time when it will be most needed.
— SIX (@sixgroup) July 13, 2020
The Swiss Stock Exchange today announced that its SFTR reporting services is now live in synchronisation with the introduction of the regulation. Over 170 clients stand to benefit from this offering. The Swiss Stock Exchange automates the way it provides Unique Transaction Identifiers (UTI) creating a scale offering featuring SFTR-compliant and fully delegated reporting. For the delegated reporting, SIX has partnered with UnaVista, London Stock Exchange Group’s award winning trade repository.
SFTR requires a vast amount of transactions to be reconciled between market participants, regulators and trade repositories with the aim of creating market-wide transparency and efficiency. The impact is particularly felt among smaller and mid-sized institutions which have to operate on thin margins with low scale. Delegating the work to an infrastructure provider like SIX is an efficient means to continue to compete.
As SFTR is a European regulation, SIX partnered with Comyno, a consultancy firm based in Frankfurt. Thanks to the successful collaboration on both sides, a comprehensive and efficient solution was implemented on time..
Commenting on the launch, Raphael Heuberger, Head Business Development Securities Finance, Securities & Exchanges, SIX said: “The launch of this service is yet another commitment to the cross-border business in our market. With a long-term strategy, effective partnerships and scale, we support the market to tackle their vastly changing regulatory environment.”
Markus Büttner, Founder & Director at Comyno: “Working with SIX was an important milestone in the history of our consultancy firm. The SFTR relevant know-how of our consultants spans from IT relevant topics to business related service aspects. The software systems developed for SFTR could ensure that a solution could always be guaranteed which was an important factor given the tight time schedule. We look forward to collaborate further with SIX.”
KDPW Launches SFTR trade repository
KDPW has launched the trade repository service for securities financing transactions (SFTR trade repository). The new reporting obligations are imposed by the European Union’s Securities Financing Transactions Regulation (SFTR). The SFTR requires the reporting of SFT (securities financing transaction) details to authorised trade repositories as an obligation of all market participants, including financial and non-financial entities.
The reporting obligation came into force on 13 July 2020. The original effective date was 13 April 2020; however, in view of the coronavirus pandemic, it was postponed by European capital market supervisor, ESMA.
§ securities lending and borrowing;
§ repos and reverse repos in securities and guaranteed rights;
§ buy-sell-back and sell-buy-back transactions in securities, commodities, and guaranteed rights;
§ collateral management transactions.
As of 7 May 2020, ESMA extended the registration of the KDPW trade repository to include the reporting of transactions under the SFTR. KDPW, which has operated a trade repository under EMIR for a number of years, has the necessary experience, expertise, resources, and a range of technological and procedural solutions to collect and maintain trade reports.
The complementary services offered by KDPW provide participants of the trade repository (both under SFTR and EMIR) with a range of key benefits offered by KDPW’s existing communication interfaces, the option of meeting both reporting obligations in a single trade repository, reduction of the workload, the availability of off-the-shelf technology solutions and expert support, as well as an attractive price list which largely reduces the cost of the reporting obligations.
The SFTR ensures that European supervisory authorities have access to details of securities financing transactions and aims to improve risk monitoring tools, which should improve the safety of the financial markets.
Each entity trading in SFT is required to hold a legal entity identifier (LEI) used in reporting. As an LOU accredited by the GLEIF, KDPW offers the LEI issuance and maintenance service.
Who is required to report SFT details to authorised trade repositories?
The obligation of reporting SFT to authorised trade repositories applies to all business entities in the European Union, including both financial and non-financial entities (irrespective of the business sector) such as:
- investment firms;
- credit institutions;
- insurance/reinsurance establishments;
- UCITS (undertakings in the collective investment in transferable securities);
- AIF (alternative investment funds);
- pension funds;
- CCPs and CSDs.
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Proposed changes would lead to an unsustainable level of additional cost and liability for issuers.
The regulator seeks input on the use of DLT for trading, settlement and regulatory reporting.
The strategic move taps into the existing geographic infrastructure within TP ICAP.