London Stock Exchange Group
Steve Holland
10 July 2018
Steve Holland, product manager of the London Stock Exchange Group, suggests data is essential for SFTR readiness
Image: Shutterstock
How are market participants coming together to deliver SFTR?
Although the industry is still at least a year away from reporting for the Securities Financing Transactions Regulation (SFTR), various market participants are coming together to leverage each other’s strengths and capabilities. The trade repositories, including UnaVista, are working with intermediary aggregators, financial software providers and reporting firms to ensure that they understand the SFTR reporting requirements and prepare accordingly well ahead of go-live.
As we did for Markets in Financial Instruments Regulation (MiFIR), UnaVista continues to offer opportunities for reporting firms to learn more from our regulatory experts as well as peers. Industry groups like International Securities Lending Association (ISLA) and International Capital Market Association (ICMA) run similar initiatives for participants to thoroughly analyse what many envisage to be potential challenges. All of these communities enable participants to build their understanding and share experiences about their route to compliance. UnaVista is actively engaged in these conversations and partners with over 50 firms that participants can choose to help provide seamless regulatory reporting.
Is data a key consideration for participants?
Data is essential for SFTR readiness. UnaVista has extensive experience in helping firms bring together their regulatory data and providing project tools to analyse that data. We are also working closely with the data aggregators who already store a lot of the necessary information. The aggregators are looking for any gaps to fully understand what’s deliverable for SFTR.
There will also be the assisted and delegated reporting routes, which some firms may need to take due to the complexity of the reporting and the mandated ISO 20022 format in which firms need to submit their data. UnaVista is well positioned to support multiple models to meet the various client scenarios.
What should firms do to start preparing?
Early preparation is our key recommendation. As an approved reporting mechanism (ARM) for MiFIR and trade repository for European Market Infrastructure Regulation (EMIR), we’ve seen that the earlier clients start their project, the more successful the project outcome. For example, it enables firms to identify what systems and processes they need to change and ensure they have ample time to do so.
As a first step, reporting firms should be looking at their processes and where their data comes from.
There are also other elements to consider such as the introduction of branch level legal entity identifiers (LEIs) for SFTR, which may be a challenge for those firms with clients or counterparties not currently operating under EMIR or MiFIR.
Firms need to start looking at making key strategic decisions, including whether to purchase or build a solution to prepare and deliver data to the trade repository. Whichever route a firm chooses, the decision needs to be taken well in advance to allow sufficient time for all the necessary testing ahead of the reporting go-live.
What should firms consider when picking a vendor for their SFTR project?
Embarking on a regulatory reporting project can be very time and resource-consuming for firms. Experience and trust are two key things we would urge firms to consider when selecting a vendor.
Firms should select a vendor that best suits the way they work. They may also want to consider how the right vendor can help future-proof their reporting arrangements when new regulations are introduced, or significant changes made to existing ones.
What does UnaVista bring to the SFTR equation?
UnaVista is one of the largest EMIR trade repositories and we bring a vast amount of experience in regulatory reporting. Our regulatory hub helps firms fulfil their reporting obligations for multiple global regulations, including EMIR which has been widely likened to SFTR in structure.
We also have several products that can help clients prepare their data. We offer a Rules Engine product, which helps clients put their data into the right format and enriches any data that is missing. As we move to a mandated ISO 20022 format for SFTR, which is one of the major differences from EMIR, the need for a data preparation tool will become even more pertinent.
UnaVista also offers the SFTR Accelerator Programme, which includes a pre-testing project environment for clients. The SFTR Accelerator tool allows firms to carry out a gap analysis to see what data they still need to collect allowing them to contact vendors and counterparties well in advance of go-live. Firms are also able to turn validations on and off and focus testing on specific areas, allowing them to approach the testing in smaller bite size chunks.
Why is it important for firms to test their data?
The testing of data will be especially important for SFTR due to the breadth and complexity of the requirements and workflows needed to meet the regulation and data validations at the trade repository.
This is why we have designed and built our Accelerator product for SFTR clients, to enable them to get on with data testing, so that when our UAT environment becomes available they can concentrate on the technical aspects of connecting to the trade repository.
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