ISLA publishes SFTR best practice guide
07 April 2020 London
Image: Shutterstock
The International Securities Lending Association (ISLA) has released a new best practice guide for the Securities Financing Transactions Regulation (SFTR) that consolidates its findings to date.
The key objective of SFTR is to regulate the structured reporting of transactions such as securities lending, repos and buy-sell backs to enhance transparency across EU capital markets and mitigate risks associated with shadow banking.
Firms will have to declare all in-scope instruments to an authorised trade repository in addition to any requirements under the European Markets Infrastructure Regulation and the second Markets in Financial Instruments Directive.
The first phase of SFTR is officially set to come into force on 11 April for investment firms and credit institutions but EU regulators have granted a three-month reprieve so that those entities can begin reporting in July along with phase-two entities (central counterparties and central securities depositories).
The grace period was offered in response to concerns that the disruption to businesses brought on by the COVID-19 pandemic meant that many firms would not be able to meet the April deadline.
The association’s new SFTR guide, which is available for all members, is based on the findings and outputs of its working groups and ISLA-led initiatives.
It includes guidelines on the regulatory technical standards, corporate actions and life-cycle events as well as SFTR market impact reports.
ISLA notes that, in due course, all current and legacy ISLA best practice documents (including SFTR: corporate actions best practice) found within industry guides and best practice will be migrated to the handbook.
These general best practice guides will be open to both members and non-members but the regulation-specific guides are reserved for members.
The SFTR guide may also be updated as new interpretations and guidance become available.
ISLA says it is open to feedback on all aspects of the guide from users.
The full guide is available here.
The key objective of SFTR is to regulate the structured reporting of transactions such as securities lending, repos and buy-sell backs to enhance transparency across EU capital markets and mitigate risks associated with shadow banking.
Firms will have to declare all in-scope instruments to an authorised trade repository in addition to any requirements under the European Markets Infrastructure Regulation and the second Markets in Financial Instruments Directive.
The first phase of SFTR is officially set to come into force on 11 April for investment firms and credit institutions but EU regulators have granted a three-month reprieve so that those entities can begin reporting in July along with phase-two entities (central counterparties and central securities depositories).
The grace period was offered in response to concerns that the disruption to businesses brought on by the COVID-19 pandemic meant that many firms would not be able to meet the April deadline.
The association’s new SFTR guide, which is available for all members, is based on the findings and outputs of its working groups and ISLA-led initiatives.
It includes guidelines on the regulatory technical standards, corporate actions and life-cycle events as well as SFTR market impact reports.
ISLA notes that, in due course, all current and legacy ISLA best practice documents (including SFTR: corporate actions best practice) found within industry guides and best practice will be migrated to the handbook.
These general best practice guides will be open to both members and non-members but the regulation-specific guides are reserved for members.
The SFTR guide may also be updated as new interpretations and guidance become available.
ISLA says it is open to feedback on all aspects of the guide from users.
The full guide is available here.
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