SFTS2019: Keep SFTR challenges in sharp focus
09 May 2019 London
Image: Shutterstock
The industry needs to keep the impact of getting Securities Financing Transactions Regulation (SFTR) wrong in sharp focus, according to Harpreet Bains, executive director, agent lending, global product head, J.P. Morgan.
During a panel at the Finance Technology Symposium, the moderator, Val Wotton, managing director of Deriv/SERV, DTCC, asked panellists what lessons can be learned from previous regulation implementation and how those can be applied to SFTR.
Bains highlighted that whilst it's understood that regulators have indicated they are sympathetic to challenges in the new regulatory environment, we can still expect to get severe fines for misreporting.
She explained: “We have to be really careful that we are not copying or manufacturing data to make a fully matched report—a matched report is not necessarily an accurate or compliant report.”
Another speaker echoed this and said that matching is a result of having good data in the first place.
Through testing, one firm found that 65 percent of reports are inaccurate so there is a lot of work to be done.
Another panellist suggested that regulations are far clearer now than previous, SFTR was released with a much clearer view and although there are still things that need to be done, that was one of the lessons learned from regulators.
Meanwhile, one industry expert explained that the firm is constantly hearing about pairing and matching rates are currently not being fantastic—matching across fields is difficult but the pairing is solvable.
They said: “Solve the basis issues then work through the next steps.”
The panel also discussed where firms should currently be in terms of preparations and the steps that firms need to be taking now.
Another speaker suggested that because everyone is currently in different places, an industry roadmap would be helpful for clients and counterparties to see where everyone is in terms of product implementation.
They noted that the “most worrying” type of client is “the one that hasn’t start the project yet”.
With 947 entities reporting on SFTR, a panellist said there are still a large number of those who are yet to learn what SFTR is and how it will affect them. One speaker explained: “If I had an industry roadmap in my hand now user acceptance testing (UAT) should be where you are right now.”
The panel agreed that firms need to test as much as they can, as early as they can.
Another panellist also voiced the same opinion and suggested that an industry roadmap would be helpful.
They suggested that from the vendor community, “we need to be better at showing the industry an industry roadmap and how we’re integrating. This would also help clients understand our timeline”.
Going back to how to best prepare from implementation, a speaker explained that project teams need to be “adequately resourced”, while also retaining the team close to implementation. They stressed that SFTR “does not begin and end in 2020.”
During a panel at the Finance Technology Symposium, the moderator, Val Wotton, managing director of Deriv/SERV, DTCC, asked panellists what lessons can be learned from previous regulation implementation and how those can be applied to SFTR.
Bains highlighted that whilst it's understood that regulators have indicated they are sympathetic to challenges in the new regulatory environment, we can still expect to get severe fines for misreporting.
She explained: “We have to be really careful that we are not copying or manufacturing data to make a fully matched report—a matched report is not necessarily an accurate or compliant report.”
Another speaker echoed this and said that matching is a result of having good data in the first place.
Through testing, one firm found that 65 percent of reports are inaccurate so there is a lot of work to be done.
Another panellist suggested that regulations are far clearer now than previous, SFTR was released with a much clearer view and although there are still things that need to be done, that was one of the lessons learned from regulators.
Meanwhile, one industry expert explained that the firm is constantly hearing about pairing and matching rates are currently not being fantastic—matching across fields is difficult but the pairing is solvable.
They said: “Solve the basis issues then work through the next steps.”
The panel also discussed where firms should currently be in terms of preparations and the steps that firms need to be taking now.
Another speaker suggested that because everyone is currently in different places, an industry roadmap would be helpful for clients and counterparties to see where everyone is in terms of product implementation.
They noted that the “most worrying” type of client is “the one that hasn’t start the project yet”.
With 947 entities reporting on SFTR, a panellist said there are still a large number of those who are yet to learn what SFTR is and how it will affect them. One speaker explained: “If I had an industry roadmap in my hand now user acceptance testing (UAT) should be where you are right now.”
The panel agreed that firms need to test as much as they can, as early as they can.
Another panellist also voiced the same opinion and suggested that an industry roadmap would be helpful.
They suggested that from the vendor community, “we need to be better at showing the industry an industry roadmap and how we’re integrating. This would also help clients understand our timeline”.
Going back to how to best prepare from implementation, a speaker explained that project teams need to be “adequately resourced”, while also retaining the team close to implementation. They stressed that SFTR “does not begin and end in 2020.”
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SFTS2019: History tells us trade repositories are much better prepared for SFTR
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