ESMA clarifies SFTR reporting


ESMA clarifies SFTR reporting

9 January 2020

Regulatory News Alert

Context and objectives

On 6 January 2020, ESMA published its final report, Guidelines on reporting under the Securities Financing Transactions Regulation (SFTR), which includes amended SFTR validation rules and a statement on Legal Entity Identifiers (LEI).

The first phase of SFTR is comes into force on 13 April 2020 for investment firms and credit institutions, and July 2020 for central counterparties and central securities depositories. The objective is to increase transparency of financing markets.

The final report released by ESMA contains a detailed assessment of the feedback received in response to the proposals in the consultation paper published in May 2019, as well as a more detailed discussion on the market transactions that are not in scope.

The guidelines aim to clarify a number of provisions of SFTR and to provide practical guidance on the implementation of some of those provisions. The guidelines have the objective to contribute to the reduction of costs along the complete reporting chain.

The guidelines clarify the following elements:

  • The reporting start date when it falls on a non-working day
  • The number of reportable SFTs
  • The population of reporting fields for different types of SFTs
  • The approach used to link SFT collateral with SFT loans
  • The population of reporting fields for margin data
  • The population of reporting fields for reuse, reinvestment, and funding sources data
  • The generation of feedback by TRs and its subsequent management by counterparties, namely in the case of:
    (i) rejection of reported data and
    (ii) reconciliation breaks;
  • The provision of access to data to authorities by TRs.

The LEI statement clarifies the expectations with regards to reporting of LEI for issuers of securities used in SFTs, as well as the relevant supervisory actions to be carried out by authorities. ESMA reiterates the importance of receiving LEIs from all relevant parties under SFTR but noted that “considering the still unsatisfactory level of LEI coverage on the global scale” it was adjusting its rules in order to “ensure a smooth introduction of the SFTR reporting regime”. ESMA stressed that the relaxation of the validation rules only applies to third-country issuers and does not affect LEI reporting in any other instance, including the identification of third-country entities that take part in a securities financing transaction.

Finally, ESMA has updated the SFTR validation rules. The amended SFTR validation rules are aligned with the updated XML schemes published in December 2019, as well as with the LEI statement.


How can Deloitte help?

Our Deloitte Transaction Regulatory Reporting Solutions also support institutions in their day-to-day obligations in the context of SFTR as well as EMIR and MiFiR reporting.

Deloitte’s advisory specialists and dedicated services will help you design and implement your business strategy in light of future evolutions of the regulatory framework and market trends.

Deloitte’s RegWatch Kaleidoscope service helps you to stay ahead of the regulatory curve and to better manage and plan for upcoming regulations.

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Marijana Vuksic
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