SFTR: Buy side start reporting
12 October 2020 London
Image: rustamank/Adobe.com
Buy-side members must begin reporting under the EU's Securities Financing Transactions Regulation (SFTR) from today as part of the third phase of implementation.
SFTR reporting obligations now apply to investment funds, pension funds and (re-)insurance undertakings, which join sell-side firms, central counterparties and central securities depositories that began reporting in July.
“The first few months of SFTR reporting have certainly exceeded expectations with consistently high acceptance rates reported by the trade repositories,” states the International Capital Market Association. “It is hoped that the buy-side firms that start reporting today can build on and replicate this success.”
Nearly all (95 percent) of the transactions reported under SFTR were accepted by trade repositories in the opening weeks of reporting.
The International Securities Lending Association estimates that securities lending trades alone accounted for some 1 million of all transactions reported in the first week.
The addition of buy side firms’ transaction data is expected to significantly increase the overall SFT data being reported.
SFTR represents the securities finance industry’s first dual-sided reporting regime, including legal entity identifies and unique transactions identifiers that account for just two of the 155 data fields that must be sent to an approved trade repository on a T+1 basis.
The regulation borrows heavily from the European Markets Infrastructure Regulation (EMIR), which focuses on derivatives, and builds upon it to create the most comprehensive reporting rules the industry has ever known.
"Due to the level of testing which was undertaken, we are confident that the buy side was well prepared for today’s deadline, says Val Wotton, managing director, product development and strategy, repository and derivatives services at DTCC. "User testing was key and a large number of firms have been active in our user acceptance testing environment for some time, with the requisite processes for reporting put in place well in advance of 12 October.
"Some of the complexities pertaining to the buy-side SFTR deadline related to the hybrid reporting model, as some buy-side firms opted to delegate their reporting to the sell side, with only the collateral reuse reporting being carried out in-house due to confidentiality issues."
The final (fourth) phase of SFTR will come into effect in January and will bring non-financial entities into its orbit.
SFTR reporting obligations now apply to investment funds, pension funds and (re-)insurance undertakings, which join sell-side firms, central counterparties and central securities depositories that began reporting in July.
“The first few months of SFTR reporting have certainly exceeded expectations with consistently high acceptance rates reported by the trade repositories,” states the International Capital Market Association. “It is hoped that the buy-side firms that start reporting today can build on and replicate this success.”
Nearly all (95 percent) of the transactions reported under SFTR were accepted by trade repositories in the opening weeks of reporting.
The International Securities Lending Association estimates that securities lending trades alone accounted for some 1 million of all transactions reported in the first week.
The addition of buy side firms’ transaction data is expected to significantly increase the overall SFT data being reported.
SFTR represents the securities finance industry’s first dual-sided reporting regime, including legal entity identifies and unique transactions identifiers that account for just two of the 155 data fields that must be sent to an approved trade repository on a T+1 basis.
The regulation borrows heavily from the European Markets Infrastructure Regulation (EMIR), which focuses on derivatives, and builds upon it to create the most comprehensive reporting rules the industry has ever known.
"Due to the level of testing which was undertaken, we are confident that the buy side was well prepared for today’s deadline, says Val Wotton, managing director, product development and strategy, repository and derivatives services at DTCC. "User testing was key and a large number of firms have been active in our user acceptance testing environment for some time, with the requisite processes for reporting put in place well in advance of 12 October.
"Some of the complexities pertaining to the buy-side SFTR deadline related to the hybrid reporting model, as some buy-side firms opted to delegate their reporting to the sell side, with only the collateral reuse reporting being carried out in-house due to confidentiality issues."
The final (fourth) phase of SFTR will come into effect in January and will bring non-financial entities into its orbit.
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