SFTS2019: History tells us trade repositories are much better prepared for SFTR
10 May 2019 London
Image: Shutterstock
History tells us that trade repositories are much better prepared for the Securities Financing Transactions Regulation (SFTR) than other regulations in the past, according to Mark Steadman, executive director of European head of product development and change management, DTCC at this years’ Securities Finance Technology Symposium in London.
Steadman discussed the difference in preparation to SFTR, compared to the readiness shown with the European Market Infrastructure Regulation (EMIR), indicating that this time around, the regulators might not be so forgiving as they were under EMIR on day one, as the industry has had a long time to implement SFTR.
Regarding SFTR, John Kernan, senior vice president and head of product development at Regis-TR said he would like to take a slightly more optimistic view concerning SFTR, hoping that national competent authorities (NCAs) are pragmatic and give a six month grace period when reviewing data quality issues.
The moderator, Pierre Khemdoudi, managing director of global head of equities, data and analytics products at IHS Markit, asked panellists what kind of expectations there would be from regulators on day one of SFTR implementation and how their firms were preparing.
Kernan highlighted that Regis-TR had recently put out its user acceptance testing (UAT) environment and indicated the roll out of the trading module is scheduled in London, Luxembourg, Frankfurt and Madrid over the coming weeks.
Craig Laird, executive director of Morgan Stanley said Morgan Stanley’s core repo and sec lending build is “progressing well”, although there remains a number of open questions concerning lifecycle events and specific fields that are pending regulatory clarification.
He added: “We are learning from our individual data flows,. We are also looking at the cross over with the second Markets in Financial Instruments Directive (MiFID II) reporting for ESCB trades and how SFTR fields will be mapped to MiFID II.”
Though he indicated the relatively low volume, the complexity involved in switching eligibility between the two regulations should not be underestimated.
Khemdoudi then went on to ask how ready the industry is for SFTR implementation and what areas still need the most improvement.
Seb Malik, head of financial law at Market FinReg, said: “With UAT testing, some issues we are facing [as an industry] are to do with booking of repos. Repos, we quite often find, are booked to securities lending. But nothing will match if you’re not booking it correctly.”
Khemdoudi then asked what the panellist would advise market participants if they indicated they were not ready for SFTR.
Laird emphasised the importance of reference data accuracy and control as well as the significance of a robust control environment and having the right team of people to work with.
Malik mirrored: “Training is key, whoever you use is absolutely fundamental, from your IT team all the way up to management. Make sure everyone understands what is going on.”
He added: “Work with the working groups, such as the International Securities Lending Association and International Capital Market Association. We want to make sure we are all working to the same set of industry standards. Across every corner of Europe we want to be working to the same interpretation of fields.”
Kernan concluded: “If you are a market participant and have not yet started looking at SFTR, I would suggest finding some external expertise.”
Steadman discussed the difference in preparation to SFTR, compared to the readiness shown with the European Market Infrastructure Regulation (EMIR), indicating that this time around, the regulators might not be so forgiving as they were under EMIR on day one, as the industry has had a long time to implement SFTR.
Regarding SFTR, John Kernan, senior vice president and head of product development at Regis-TR said he would like to take a slightly more optimistic view concerning SFTR, hoping that national competent authorities (NCAs) are pragmatic and give a six month grace period when reviewing data quality issues.
The moderator, Pierre Khemdoudi, managing director of global head of equities, data and analytics products at IHS Markit, asked panellists what kind of expectations there would be from regulators on day one of SFTR implementation and how their firms were preparing.
Kernan highlighted that Regis-TR had recently put out its user acceptance testing (UAT) environment and indicated the roll out of the trading module is scheduled in London, Luxembourg, Frankfurt and Madrid over the coming weeks.
Craig Laird, executive director of Morgan Stanley said Morgan Stanley’s core repo and sec lending build is “progressing well”, although there remains a number of open questions concerning lifecycle events and specific fields that are pending regulatory clarification.
He added: “We are learning from our individual data flows,. We are also looking at the cross over with the second Markets in Financial Instruments Directive (MiFID II) reporting for ESCB trades and how SFTR fields will be mapped to MiFID II.”
Though he indicated the relatively low volume, the complexity involved in switching eligibility between the two regulations should not be underestimated.
Khemdoudi then went on to ask how ready the industry is for SFTR implementation and what areas still need the most improvement.
Seb Malik, head of financial law at Market FinReg, said: “With UAT testing, some issues we are facing [as an industry] are to do with booking of repos. Repos, we quite often find, are booked to securities lending. But nothing will match if you’re not booking it correctly.”
Khemdoudi then asked what the panellist would advise market participants if they indicated they were not ready for SFTR.
Laird emphasised the importance of reference data accuracy and control as well as the significance of a robust control environment and having the right team of people to work with.
Malik mirrored: “Training is key, whoever you use is absolutely fundamental, from your IT team all the way up to management. Make sure everyone understands what is going on.”
He added: “Work with the working groups, such as the International Securities Lending Association and International Capital Market Association. We want to make sure we are all working to the same set of industry standards. Across every corner of Europe we want to be working to the same interpretation of fields.”
Kernan concluded: “If you are a market participant and have not yet started looking at SFTR, I would suggest finding some external expertise.”
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