EXCLUSIVE: SFTR to be adopted as early as Q4 this year
05 July 2018 Brussels
Image: Shutterstock
The European Commission has revealed that the level two reporting technical standard (RTS) around Securities Financing Transaction Regulation (SFTR) will be adopted by Q1 2019 making Q1 2020 the go-live date.
The first entities expected to report under the regulation will be the second Markets in Financial Instruments Directive (MiFID II) and Capital Requirements Directives (CRD) IV credit institutions 12 months later.
The announcement comes subsequent to Market Finreg’s action against the European Commission for its failure to adopt SFTR RTS, which the European Securities and Markets Authority (ESMA) presented to them on 31 March last year.
Market Finreg explained that under EU law, the commission has three months to adopt or request modifications of an RTS or implementing technical standards (ITS).
In June, Market Finreg reported that its action had resulted in the commission formally responding. However, it noted that the industry’s fundamental concerns remain.
On its website, Market Finreg said: “We are pursuing our action for the sake of the securities lending industry.”
On 5 July, Market Finreg received an update after asking what the delta between ESMA's RTSs and the commission's intended adoption is. The European Commission said the issues under dispute are "very narrow" and "wouldn't have major implications" on the industry.
According to Market Finreg, the vast majority of the RTS's details have been adopted but because they are interlinked, they cannot adopt piecemeal—so they have to wait until everything is finalised before adopting.
The company explained that the EU Parliament and Council then have three months to adopt it. After that, it takes some weeks to hit the Official Journal. Typically legislation will say "comes into legal force 20 days after appearing in the Official Journal".
Seb Malik, head of financial law (regulation) at Market Finreg, said: "This is great news for the industry as it dispels the rampant rumour-mongering about a greatly changed SFTR 2.0 being privately concocted by the Commission. Firms now have greater clarity of both the start date and the contents and can now commit resources to build."
You can read the full updates from Market Finreg here.
The first entities expected to report under the regulation will be the second Markets in Financial Instruments Directive (MiFID II) and Capital Requirements Directives (CRD) IV credit institutions 12 months later.
The announcement comes subsequent to Market Finreg’s action against the European Commission for its failure to adopt SFTR RTS, which the European Securities and Markets Authority (ESMA) presented to them on 31 March last year.
Market Finreg explained that under EU law, the commission has three months to adopt or request modifications of an RTS or implementing technical standards (ITS).
In June, Market Finreg reported that its action had resulted in the commission formally responding. However, it noted that the industry’s fundamental concerns remain.
On its website, Market Finreg said: “We are pursuing our action for the sake of the securities lending industry.”
On 5 July, Market Finreg received an update after asking what the delta between ESMA's RTSs and the commission's intended adoption is. The European Commission said the issues under dispute are "very narrow" and "wouldn't have major implications" on the industry.
According to Market Finreg, the vast majority of the RTS's details have been adopted but because they are interlinked, they cannot adopt piecemeal—so they have to wait until everything is finalised before adopting.
The company explained that the EU Parliament and Council then have three months to adopt it. After that, it takes some weeks to hit the Official Journal. Typically legislation will say "comes into legal force 20 days after appearing in the Official Journal".
Seb Malik, head of financial law (regulation) at Market Finreg, said: "This is great news for the industry as it dispels the rampant rumour-mongering about a greatly changed SFTR 2.0 being privately concocted by the Commission. Firms now have greater clarity of both the start date and the contents and can now commit resources to build."
You can read the full updates from Market Finreg here.
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