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SFTR Reporting

Getting Value from Trade & Transaction Reporting Solutions

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Solution OverviewMKT_3098_17_SFTR_Brochure.pdf


SFTR Reporting

The challenges around Article 4

Background

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.


Main Features

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.

Observations

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:

In all cases, we believe Message Automation is in a position to assist market participants

A truly STRATEGIC solution to Trade and Transaction

Reporting

Message Automation (MA) provides a deployed technology solution that facilitates end-to-end trade and transaction reporting between multiple source systems and destinations, in both real time and batch. The solution covers reporting to a range of jurisdictions including Dodd Frank – CFTC, EMIR, MiFID I and II, Canadian, Swiss, Russian and key Asian jurisdictions from a single data layer, viewed through a user configurable dashboard.

This range of coverage clearly sets us apart from our competitors but that is only one reason why our clients choose us

Commercial and operational INDEPENDENCE

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.


MA clients can always adopt the most cost-effective way

to report

Enrichment

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.

Pre-submission matching

As in EMIR, we feel that intra and inter trade repository matching will be a challenge due to the fragmentation of pre-trade repository matching and lack of interoperability between different matching services. Consequently, we expect larger organisations may want to receive feeds of their counterpart trades from multiple platforms and perform their own internal pre-submission matching. MA can facilitate this through our matching engine totalORDER.

Modular

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.

Operational Visibility

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-jurisdictional reporting has enabled us to design our system to cater for the operational requirements of reporting and proving the accuracy of the numbers being reported to both internal stakeholders and regulators.

Brochures

Please download the info sheets:

SFTR Reporting MKT_3098_17_SFTR_Brochure.pdf