Final phase of SFTR goes live
11 January 2021 UK
Image: geschmacksRaum/adobe.stock.com
The final phase of the EU’s Securities Financing Transactions Regulation (SFTR) is now live, bringing non-financial counterparties (NFCs) within the orbit of the reporting framework.
UK NFCs are no longer required to report under SFTR as the UK scrapped phase four of the regulation when on-shoring its version of the regulation prior to the completion of the Brexit transition period.
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.
Phase one and two related to sell-side firms, central counterparties and central securities depositories that began reporting in July 2020, while phase three brought in investment funds, pension funds and (re-)insurance undertakings, which joined in October 2020.
With the fourth phase of SFTR phase now in play, the industry can fully turn its attention to solving some of the lingering reporting issues that arose during earlier phases.
According to Susana Huete, a senior consultant at Margin Reform, these include data quality, reporting delegation, collateral bulk rejection from trade repositories (TR) and pairing challenges.
Huete adds that the UK’s divergence from the EU’s SFTR means the main focus for this final phase will be to get the correct reporting depending on jurisdiction, as there will be no inter TR reconciliation between UK and EU.
This means that some firms will need to report to both an EU and UK TR.
Now read: SFT's SFTR Annual 2020
UK NFCs are no longer required to report under SFTR as the UK scrapped phase four of the regulation when on-shoring its version of the regulation prior to the completion of the Brexit transition period.
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.
Phase one and two related to sell-side firms, central counterparties and central securities depositories that began reporting in July 2020, while phase three brought in investment funds, pension funds and (re-)insurance undertakings, which joined in October 2020.
With the fourth phase of SFTR phase now in play, the industry can fully turn its attention to solving some of the lingering reporting issues that arose during earlier phases.
According to Susana Huete, a senior consultant at Margin Reform, these include data quality, reporting delegation, collateral bulk rejection from trade repositories (TR) and pairing challenges.
Huete adds that the UK’s divergence from the EU’s SFTR means the main focus for this final phase will be to get the correct reporting depending on jurisdiction, as there will be no inter TR reconciliation between UK and EU.
This means that some firms will need to report to both an EU and UK TR.
Now read: SFT's SFTR Annual 2020
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