April 1, 2017

The European Securities and Markets Authority (ESMA) has issued today a final report on standards implementing the Securities Financing Transaction Regulation (SFTR), which aims to increase the transparency of securities financing transactions (SFTs).

With these transactions cash or securities are borrowed against collateral composed of securities, commodities or cash – this includes repurchase transactions, securities lending, sell/buy-back transactions and margin lending. The SFTR will require both financial and non-financial market participants to report details of their SFTs to an approved EU trade repository (TRs).

ESMA’s final standards provide detailed provisions on:

  • SFT reporting – including the use of ISO 20022 methodology for reporting, validation and access to data;
  • data collection and availability – the use of standardised identifiers such as LEI, UTI and ISIN which should improve data quality and aggregation across TRs;
  • defined access levels for different public authorities;
  • registration and extension of registration of TRs – detailed requirements on:
  • verification of completeness and correctness of reports;
  • data availability and integrity;
  • operational separation;
  • ancillary services;
  • outsourcing;
  • IT resources; and
  • exchange of data on sanctions between authorities.

The SFTR implementing measures are expected to enter into force by the end of 2017. Firms would have to start reporting their SFTs to TRs twelve months after the publication in the Official Journal of the European Union. The reporting obligation itself will be phased-in over nine months.

The press release can be found on the ESMA website here.

Related links:

Outline of AxiomSL’s SFTR solution