SFTR standards set to soon be adopted by Brussels
12 December 2018 London
Image: Shutterstock
The Securities Finance Transactions Regulations (SFTR) standards may be adopted by Brussels within the next few days, a source has revealed.
However, there is uncertainty over which SFTR standards will be adopted. On 31 March last year, the European Securities Markets Association gave the draft level II legislation to the European Commision. The commission ordinarily has three months to accept it, adopt, and/or change it.
This was delayed and after some time the commission told ESMA that they were happy to adopt it with a few minor changes. In response, ESMA said that they were not prepared to make those changes, which pushed the ball back into the commission’s court.
As it currently stands, the commission can either adopt their own version, which is very similar apart from minor points regarding legal entity identifiers and futures, or they can stick to ESMA’s version and then adopt it, and then the council has three months to scrutinise it.
However, if the commission decides to tweak ESMA’s legislation then they will adopt their own version of their legislation, and that increases the period of scrutiny to an additional three months.
One source said that firms—in particular, medium and small-sized firms—are not committing to their SFTR projects because it has not yet been adopted.
According to a source, if this results in a six month scrutiny period then firms will most likely not take advantage of this extra time to act and plan.
In that scenario, however, the commission may override ESMA. Unofficially, ESMA could lobby sympathetic parliamentarians to raise objections.
However, there is uncertainty over which SFTR standards will be adopted. On 31 March last year, the European Securities Markets Association gave the draft level II legislation to the European Commision. The commission ordinarily has three months to accept it, adopt, and/or change it.
This was delayed and after some time the commission told ESMA that they were happy to adopt it with a few minor changes. In response, ESMA said that they were not prepared to make those changes, which pushed the ball back into the commission’s court.
As it currently stands, the commission can either adopt their own version, which is very similar apart from minor points regarding legal entity identifiers and futures, or they can stick to ESMA’s version and then adopt it, and then the council has three months to scrutinise it.
However, if the commission decides to tweak ESMA’s legislation then they will adopt their own version of their legislation, and that increases the period of scrutiny to an additional three months.
One source said that firms—in particular, medium and small-sized firms—are not committing to their SFTR projects because it has not yet been adopted.
According to a source, if this results in a six month scrutiny period then firms will most likely not take advantage of this extra time to act and plan.
In that scenario, however, the commission may override ESMA. Unofficially, ESMA could lobby sympathetic parliamentarians to raise objections.
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