SFTR Reporting

The Securities Financing Transactions Regulation, SFTR (Regulation (EU) 2015/2365) entered into force on 12 January 2016.

Relevant Regulation: Securities Financing Transactions Regulation (EU) 2015/2365 (SFTR)

Start date: 13 July 2020

Regulatory Type: Regulatory reporting

Types of firms affected: EU counterparties to SFT contracts such as banks, investment firms, CCPs, CSDs, insurance, reinsurance undertakings, pension funds, UCITs, AIFs and non-financial counterparties

Supervisory authority: NCAs, ESMA

Frequency of reporting: T+1

The Securities Financing Transactions Regulation SFTR

The Securities Financing Transactions Regulation (SFTR EU 2015/2365) entered into force on 12 January 2016. In 2020, however, several significant technical changes to the market’s existing data flows are now required to fulfil its new reporting obligations.

The SFTR defines a Securities Financing Transaction (SFT) as comprising the following:
(a) Repurchase transactions;
(b) Lending and borrowing of securities or commodities;
(c) Buy-sell back and sell-buy back transactions; and
(d) Margin lending transactions.

Each category concerns raising finance through the use of assets owned by a counterparty to the transaction.

Although the regulation does not cover derivative contracts, the definition of SFTs includes liquidity swaps and collateral swaps, which do not currently fall under the European Markets and Infrastructure Regulation (ΕΜΙR) definition.

The SFTR also requires disclosure of certain information pertaining to total return swaps. A total return swap is defined as a derivative in which one counterparty transfers the total economic performance—including income from interest and fees, gains and losses from price movements, and credit losses—of a reference obligation to another counterparty.

ΜΑΡ FinTech is engaging clients, industry bodies and other market infrastructure providers to identify and discuss the changes that are required to implement SFTR transaction reporting. As a result, ΜΑΡ FinTech offers its clients a specialised product to support their SFTR reporting.

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