EXCLUSIVE: Deutsche Boerse bows out of SFTR reporting
18 December 2019 Frankfurt
Image: Shutterstock
Deutsche Boerse has confirmed that it has pulled the plug on plans to offer reporting services for the incoming Securities Financing Transactions Regulation (SFTR) after questions were raised regarding the viability of the business case.
The first phase of SFTR is due to come into force in April 2020 and industry participants are currently awaiting the publication of the final reporting standards and an ISO-registered version of the XML schemas expected later this week.
Until recently, the German group was expected to add SFTR reporting services to its Regulatory Reporting Hub (RRH), but it has since informed clients in a letter that after “careful re-considerations” of the business case it would “no longer pursue such [an] offering”.
Deutsche Boerse’s only SFTR-focused service will now come through Regis-TR, a jointly owned trade repository of Deutsche Boerse and BME, the Spanish stock exchange.
In its letter to clients, sent out last month, Deutsche Boerse cited a lack of interest from prospective users in its SFTR service, versus the cost to implement and keep it running at a competitive price as the main driver behind its decision to cease pursuing the service.
RRH will continue to provide reporting services for the Markets in Financial Instruments Regulation and the European Market Infrastructure Regulation, but it is understood that it was unable to convert users of these services to its SFTR offering or capture sufficient new clients.
In the letter, the exchange went on to explain that it had found from conversations with clients that they would prefer to go directly to a trade repository or via a security lending provider, thereby making a reporting service unnecessary.
However, multiple sources with knowledge of the matter have noted RRH’s lack of appeal may have been more to do with its late entry into the SFTR reporting arena, and relatively small established customer-base, compared to other regulatory reporting service providers.
It was also noted that the complex nature of SFTR’s reporting requirements drove RRH's prospective clients to sign up with its more established peers that were seen as being further along in their SFTR preparations.
It is also understood that Deutsche Boerse’s own post-trade services provider, Clearstream, had decided several months ago that it would use a different intermediary for its SFTR obligations, instead of RRH.
Those that did choose RRH for their SFTR reporting requirements will now have to scramble to find another service provider and begin onboarding and testing with only four months to go before go-live.
The final months before go-live have seen other reporting services providers strongly encouraging their existing clients and prospective users to commit to building the necessary pipes for SFTR reporting.
Early last month
EquiLend set a deadline of 15 November for users to begin onboarding in order to to ensure they were fully prepared.
The first phase of SFTR is due to come into force in April 2020 and industry participants are currently awaiting the publication of the final reporting standards and an ISO-registered version of the XML schemas expected later this week.
Until recently, the German group was expected to add SFTR reporting services to its Regulatory Reporting Hub (RRH), but it has since informed clients in a letter that after “careful re-considerations” of the business case it would “no longer pursue such [an] offering”.
Deutsche Boerse’s only SFTR-focused service will now come through Regis-TR, a jointly owned trade repository of Deutsche Boerse and BME, the Spanish stock exchange.
In its letter to clients, sent out last month, Deutsche Boerse cited a lack of interest from prospective users in its SFTR service, versus the cost to implement and keep it running at a competitive price as the main driver behind its decision to cease pursuing the service.
RRH will continue to provide reporting services for the Markets in Financial Instruments Regulation and the European Market Infrastructure Regulation, but it is understood that it was unable to convert users of these services to its SFTR offering or capture sufficient new clients.
In the letter, the exchange went on to explain that it had found from conversations with clients that they would prefer to go directly to a trade repository or via a security lending provider, thereby making a reporting service unnecessary.
However, multiple sources with knowledge of the matter have noted RRH’s lack of appeal may have been more to do with its late entry into the SFTR reporting arena, and relatively small established customer-base, compared to other regulatory reporting service providers.
It was also noted that the complex nature of SFTR’s reporting requirements drove RRH's prospective clients to sign up with its more established peers that were seen as being further along in their SFTR preparations.
It is also understood that Deutsche Boerse’s own post-trade services provider, Clearstream, had decided several months ago that it would use a different intermediary for its SFTR obligations, instead of RRH.
Those that did choose RRH for their SFTR reporting requirements will now have to scramble to find another service provider and begin onboarding and testing with only four months to go before go-live.
The final months before go-live have seen other reporting services providers strongly encouraging their existing clients and prospective users to commit to building the necessary pipes for SFTR reporting.
Early last month
EquiLend set a deadline of 15 November for users to begin onboarding in order to to ensure they were fully prepared.
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