UnaVista: Prepare ahead of SFTR implementation
27 July 2018 London
Image: Shutterstock
Prepare ahead of time for Securities Financing Transactions Regulation (SFTR), warned Steven Holland, product manager, and Andrea Ferrise, compliance manager of UnaVista.
The UnaVista duo explained that SFTR will be the next biggest regulatory change following the implementation of the second markets in financial instruments directive (MiFID II) in January this year.
Holland and Ferrise suggested that it is expected to have a significant impact on clients and the market as a whole.
SFTs are any transaction where securities are used to borrow cash or vice versa, and SFTR aims to enhance transparency in the use of these by market participants.
This will enable regulators to better monitor risks in the securities financing markers, UnaVista revealed.
Phased implementation of SFTR is expected to start from 2019, but firms should be preparing already, which includes applying for an Legal Entity Identifiers (LEI).
Holland commented: “The process to get an LEI is not complicated but investment firms should be applying for these well before the SFTR implementation date to avoid any undue delay.”
LEIs are required by issuers of all securities, which seek admission to trading on a regulated market and offer securities to the public as defined in the Prospectus Regulation.
Holland warned: “There could be a spike in the number of applications for LEIs as SFTR mandates them at a branch level, and firms need to be aware of this; if they don’t have an LEI in place, then they won’t be able to report or trade.”
“Firm’s need to plan ahead, there is never enough testing time. A recent survey we conducted found that around 48 percent of firms are already evaluating processes in preparation for SFTR”, he added.
According to Ferrise, the European Market Infrastructure Regulation (EMIR) and SFTR infrastructure will basically be the same.
Ferrise said: “Under EMIR investment firms can use multiple formats for data whereas SFTR requires information from a single source. Through Unavista clients can send files in any structured format and our rules engine will convert it into the ISO 20022 standard.”
In terms of challenges, Holland said that examples of fields which may be an issue would be the execution timestamp and pricing fields.
“There is an awareness of these issues and we [the industry] are working on how to best deal with them”, he continued.
Another challenge is data as there is so much of it and it is somewhat dispersed, Holland added.
Looking to the future, a recent survey we conducted found that around 60 percent of firms said that they are planning to directly report, Holland revealed.
The UnaVista duo explained that SFTR will be the next biggest regulatory change following the implementation of the second markets in financial instruments directive (MiFID II) in January this year.
Holland and Ferrise suggested that it is expected to have a significant impact on clients and the market as a whole.
SFTs are any transaction where securities are used to borrow cash or vice versa, and SFTR aims to enhance transparency in the use of these by market participants.
This will enable regulators to better monitor risks in the securities financing markers, UnaVista revealed.
Phased implementation of SFTR is expected to start from 2019, but firms should be preparing already, which includes applying for an Legal Entity Identifiers (LEI).
Holland commented: “The process to get an LEI is not complicated but investment firms should be applying for these well before the SFTR implementation date to avoid any undue delay.”
LEIs are required by issuers of all securities, which seek admission to trading on a regulated market and offer securities to the public as defined in the Prospectus Regulation.
Holland warned: “There could be a spike in the number of applications for LEIs as SFTR mandates them at a branch level, and firms need to be aware of this; if they don’t have an LEI in place, then they won’t be able to report or trade.”
“Firm’s need to plan ahead, there is never enough testing time. A recent survey we conducted found that around 48 percent of firms are already evaluating processes in preparation for SFTR”, he added.
According to Ferrise, the European Market Infrastructure Regulation (EMIR) and SFTR infrastructure will basically be the same.
Ferrise said: “Under EMIR investment firms can use multiple formats for data whereas SFTR requires information from a single source. Through Unavista clients can send files in any structured format and our rules engine will convert it into the ISO 20022 standard.”
In terms of challenges, Holland said that examples of fields which may be an issue would be the execution timestamp and pricing fields.
“There is an awareness of these issues and we [the industry] are working on how to best deal with them”, he continued.
Another challenge is data as there is so much of it and it is somewhat dispersed, Holland added.
Looking to the future, a recent survey we conducted found that around 60 percent of firms said that they are planning to directly report, Holland revealed.
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