ESMA updates SFTR XML schemas but withholds final guidelines
20 December 2019 Paris
Image: Shutterstock
The European Securities and Markets Authority (ESMA) has updated its XML schemas for the Securities Financing Transactions Regulation (SFTR) to an ISO-registered version but has failed to release the much-anticipated level three regulatory technical standards (RTS).
ESMA previously released “further technical details” to its reporting XML schemas on 31 October, but these were unable to be validated by the ISO evaluation team due to having several defects.
Today’s release updates ESMA’s official guidance for SFTR reporting to an amended fourth draft that achieved ISO-registration on 29 November.
The new ISO version is understood to be largely the same as the previous release from a technical standpoint.
It was however needed to avoid potential violations in contracts between service providers and market participants that stipulate that the reports generated would be via the ISO 20022 messaging framework.
Level three standards not due until January
The EU markets watchdog was widely expected to publish the final details of its SFTR requirements at some point in December, or at the latest today along with the schemas.
However, as part of today’s release, ESMA said industry participants will not get their hands on the final RTS until “early January” 2020, although multiple market observers fear it may be even later.
The first phase of SFTR is slated to come into force in April 2020 for investment firms and credit institutions, and July for central counterparties and central securities depositories.
This means firms could have as little as 12 weeks to refine their SFTR builds if the RTS comes in January.
Commenting on today’s release, a spokesperson for EquiLend said: “We are pleased to see the SFTR XML schemas published by ESMA today as we continue to work with clients to support their SFTR reporting requirements.
“The industry focus now turns to the SFTR validation rules and level three guidelines, which we anticipate being published by ESMA next month.”
The industry has spent the past few months speculating over when the final guidelines would be released, which included wide-spread doubt that many participants will be fully ready for day one of SFTR.
At the International Securities Lending Association post trade event in early October, a poll of delegates found that just under two-thirds believed that would not be ready for April if they only got their marching orders from ESMA in December.
The news that December was actually an over-optimistic guess has now re-ignited the debate around whether the April deadline is still realistic or viable.
ESMA previously released “further technical details” to its reporting XML schemas on 31 October, but these were unable to be validated by the ISO evaluation team due to having several defects.
Today’s release updates ESMA’s official guidance for SFTR reporting to an amended fourth draft that achieved ISO-registration on 29 November.
The new ISO version is understood to be largely the same as the previous release from a technical standpoint.
It was however needed to avoid potential violations in contracts between service providers and market participants that stipulate that the reports generated would be via the ISO 20022 messaging framework.
Level three standards not due until January
The EU markets watchdog was widely expected to publish the final details of its SFTR requirements at some point in December, or at the latest today along with the schemas.
However, as part of today’s release, ESMA said industry participants will not get their hands on the final RTS until “early January” 2020, although multiple market observers fear it may be even later.
The first phase of SFTR is slated to come into force in April 2020 for investment firms and credit institutions, and July for central counterparties and central securities depositories.
This means firms could have as little as 12 weeks to refine their SFTR builds if the RTS comes in January.
Commenting on today’s release, a spokesperson for EquiLend said: “We are pleased to see the SFTR XML schemas published by ESMA today as we continue to work with clients to support their SFTR reporting requirements.
“The industry focus now turns to the SFTR validation rules and level three guidelines, which we anticipate being published by ESMA next month.”
The industry has spent the past few months speculating over when the final guidelines would be released, which included wide-spread doubt that many participants will be fully ready for day one of SFTR.
At the International Securities Lending Association post trade event in early October, a poll of delegates found that just under two-thirds believed that would not be ready for April if they only got their marching orders from ESMA in December.
The news that December was actually an over-optimistic guess has now re-ignited the debate around whether the April deadline is still realistic or viable.
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