SFTR delay rumours are premature, warns ISLA CEO
08 November 2019 London
Image: Shutterstock
It is too soon to speculate on a delay to the Securities Financing Transactions Regulation’s (SFTR) 2020 deadline as the level three text is not yet public, according to the CEO of the International Securities Lending Association.
Commenting in a blog post to members, Andrew Dyson warned against “premature” speculation about a delay, given that the European Securities and Markets Authority (ESMA) is yet to release the final specification on the reporting requirements, which will confirm the scale of work still to be done on SFTR reporting solutions.
The level three text is widely expected to be released in December, which would leave those in-scope for the first phase of implementation just four months to build and test their reporting solutions in time for the April deadline.
Speaking at the Risk Management Association’s industry conference in October, Dyson quipped that this last-minute reveal by ESMA would mean that some industry participants would be forced to work throughout the festive period in order to be ready.
In the blog post, published today, Dyson said: “There has been much speculation recently about potential delays, especially around SFTR. From ISLA’s perspective, we continue to work towards the expected publication of the level three responses from ESMA prior to the Christmas period, with the first reports due in April 2020."
"There is no doubt that between the publication of the level three responses and the go-live date for tier-one firms; this will present a busy time for us all,” he continued. “However, at this stage, I think it is premature to be talking about delays until we have seen those responses, and assessed the implications on current development timelines.”
Talk of a potential delay was in part sparked following the publication of market research by Cappitech, which revealed that, as of September,
two-thirds of firms surveyed would not be ready for the April deadline.
Further concerns were also raised following the release of the XML schemas for SFTR reporting by ESMA last week, which has been shown to be in need of further work to remove known defects that mean it is not yet ISO-compliant.
ESMA is currently working with an ISO evaluation team on a fourth draft of the XML schemas that is due to be published on 22 November.
In a bid to ensure the April deadline is met, solution providers are now stepping up the pressure on clients to confirm their commitment to use the products and begin on-boarding and testing.
Earlier this week, EquiLend set prospective users a deadline of 15 November to sign up to its SFTR reporting service in order to access a “premium on-boarding experience,” which includes a plethora of testing facilities.
Multiple market participants have repeatedly highlighted the need for testing ahead of the SFTR go-live in order to avoid the poor data standards that plagued the opening months of transaction reporting under previous EU regulatory frameworks.
Regardless, a secondary finding of Cappitech’s survey was that the unforgiving timetable from ESMA will mean that many firms will try to make do with little to no testing of their reporting solutions.
Of survey respondents, nearly 11 percent said they were not planning to test at all, while 7 percent responded that they would only test in the final month ahead of go-live.
Approximately 54 percent said they only expected to be ready to test in the final three months prior to go-live.
Commenting in a blog post to members, Andrew Dyson warned against “premature” speculation about a delay, given that the European Securities and Markets Authority (ESMA) is yet to release the final specification on the reporting requirements, which will confirm the scale of work still to be done on SFTR reporting solutions.
The level three text is widely expected to be released in December, which would leave those in-scope for the first phase of implementation just four months to build and test their reporting solutions in time for the April deadline.
Speaking at the Risk Management Association’s industry conference in October, Dyson quipped that this last-minute reveal by ESMA would mean that some industry participants would be forced to work throughout the festive period in order to be ready.
In the blog post, published today, Dyson said: “There has been much speculation recently about potential delays, especially around SFTR. From ISLA’s perspective, we continue to work towards the expected publication of the level three responses from ESMA prior to the Christmas period, with the first reports due in April 2020."
"There is no doubt that between the publication of the level three responses and the go-live date for tier-one firms; this will present a busy time for us all,” he continued. “However, at this stage, I think it is premature to be talking about delays until we have seen those responses, and assessed the implications on current development timelines.”
Talk of a potential delay was in part sparked following the publication of market research by Cappitech, which revealed that, as of September,
two-thirds of firms surveyed would not be ready for the April deadline.
Further concerns were also raised following the release of the XML schemas for SFTR reporting by ESMA last week, which has been shown to be in need of further work to remove known defects that mean it is not yet ISO-compliant.
ESMA is currently working with an ISO evaluation team on a fourth draft of the XML schemas that is due to be published on 22 November.
In a bid to ensure the April deadline is met, solution providers are now stepping up the pressure on clients to confirm their commitment to use the products and begin on-boarding and testing.
Earlier this week, EquiLend set prospective users a deadline of 15 November to sign up to its SFTR reporting service in order to access a “premium on-boarding experience,” which includes a plethora of testing facilities.
Multiple market participants have repeatedly highlighted the need for testing ahead of the SFTR go-live in order to avoid the poor data standards that plagued the opening months of transaction reporting under previous EU regulatory frameworks.
Regardless, a secondary finding of Cappitech’s survey was that the unforgiving timetable from ESMA will mean that many firms will try to make do with little to no testing of their reporting solutions.
Of survey respondents, nearly 11 percent said they were not planning to test at all, while 7 percent responded that they would only test in the final month ahead of go-live.
Approximately 54 percent said they only expected to be ready to test in the final three months prior to go-live.
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