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The pace of regulatory change still shows no sign of abating with
financial institutions in Europe focusing on getting ready for MiFID II
on the 3rd January 2018, whilst not forgetting the EMIR revision on
the 1st November 2017. So for some it’s difficult to start thinking
about reporting under article 4 of the SFT regulation. However,
SFTR represents a significant change to the securities financing
world and the reporting obligation will be with us next year.
SFTR is part of the EU’s response to the financial crisis and reflects
Policy recommendations made by the Financial Stability Board (FSB)
as part of its examination of shadow banking. These recommendations
are outlined in the FSBs “Policy Framework addressing Shadow Banking
Risks in Securities Lending and Repos” published in August 2013. ESMA has
used the FSB recommendations as the foundation for SFTR whilst following
the rules and processes already contained within EMIR for consistency.
The main features of reporting under SFTR are as follows:
However, as explained earlier, SFTs are not homogenous. Consequently, the lowest level of the waterfall differs depending on the SFT i.e. Securities lending will have the collateral provider generating the UTI, whilst the collateral taker would provide the UTI for a repo or sell or buy back.
There has been a mixed response from market participants regarding the final draft RTS released from ESMA on the 31st March 2017. Some are happy that ESMA has listened to the market in some instances, e.g. the collateral reporting obligation has been changed from value date to value date +1. Others who had asked for a significant decrease in the amount of matchable fields required have been disappointed that the 82 matchable fields from the consultation paper has only been reduced to 62, increasing to 96 matchable fields after 2 years.
It is clear that to comply with the new regulation, many firms will need to change their existing processes and overcome many challenges. These are likely to include:
Message Automation (MA) provides a deployed technology solution that facilitates end-
We are completely independent of all trade repositories, ARMs, APAs, and end regulators and we offer our clients the same independence. Our platform provides a single abstraction layer between multiple internal systems and multiple external destinations. This approach prevents our clients being inextricably linked to a single external provider, with the associated potential concerns of commercial inflexibility and unsatisfactory operational performance. With MA it is possible to use more than one destination for each jurisdiction concurrently, perhaps per asset class or purpose, and destinations can be changed at any time with minimal disruption.
With 153 reportable fields, it is unlikely that most firms will have all the required data for SFTR in their source systems. Obtaining data such as cleared initial margin posted, variation margin posted, excess collateral, and making sure these numbers relate exclusively to SFT’s will be a time consuming task. Within our data model MA already harmonises margin and collateral data from over 50 CCPs globally. This is one of the many examples where MA can be used to help enrich the data to be sent to the trade repositories or a firm’s SFTR solution.
As in EMIR, we feel that intra and inter trade repository matching will be a challenge due to the fragmentation of pre-
MA can support multiple reporting routes, either end to end reporting direct to trade repositories, or sending enrichment data to matching platforms to facilitate their reporting to trade repositories or a combination of the two.
The operational overhead of understanding why trades are reportable or not reportable, dealing with acks and naks, managing and categorising exceptions, and then ensuring completeness and accuracy of reporting is often overlooked until a firm has the reporting obligation and the additional workload. Our experience in multi-
Please download the info sheets:
|Post Trade Control|
|Affirmation & Platform Connectivity|
|Inbound Clearing Reports|
|Trade & Transaction Reporting|
|Internal Trade Monitoring|
|MiFID II Reporting|
|SFTR/DF SEC/EMIR Revision|
|Getting Value from Trade Reporting Solutions|
|Dodd-Frank Trade Reporting|
|EMIR Trade Reporting|
|Canadian Trade Reporting|
|Asian Trade Reporting|
|Swiss Trade Reporting|
|South African Trade Reporting|
|Russian Trade Reporting|