Flashnews: SFTR: Reporting rules for securities financing transactions

SFTR Level II measures cover mainly details for registration as a trade repository as well as details for the reporting to trade repositories with data access, format and frequency of reports.

Just to remind you that this European Regulation (EU) 2015/2365 came into force on 12 January 2016 with the two following measures already effective:

• Since 13 January 2017 (Art.13), the disclosure to investors by investment funds (UCITS and AIFs) on the use of SFTs in their annual and half-annual reports as per information listed in section A of the Annex of the Regulation.
• Since 13 July 2017 (Art.14), information disclosed in Section B of the Annex of the regulation must be included in the prospectus and/or any other pre-contractual document.

Like for EMIR, transactions covered under SFTR (Securities lending, repurchase agreement or Repo, buy-sell back or sell-buy back transaction, margin lending transaction) have to be reported to authorized SFTR Trade Repositories by financial and non-financial counterparties for direct and immediate date access to NCAs (National Competent Authorities).

ESMA published on 19 March 2020, a statement regarding SFTR implementation. This approach was necessary in response to the effect of adverse developments events because of the COVID-19 pandemic. In short, ESMA expected NCAs not to prioritize their supervisory actions towards entities subject to SFT reporting obligations as of 13 April 2020 and until 13 July 2020.

In May 2020, ESMA approved with effect from 7 May 2020, four TRs ahead of the next phase of the reporting regime, i.e. 13 July 2020: DTCC Derivatives Repository plc, UnaVista TRADEcho B.V., Krajowy Depozyt Papierów Wartościowych S.A. and REGIS-TR S.A.

All TRs start receiving SFT data from reporting firms (Phase 1 – 13 July 2020 in respect of banks and investment firms). ESMA continues to engage with market participants to clarify remaining issues faced by authorities and reporting firms during Phase 1. 

As the reporting requirements were being phased-in in four stages, the next reporting phases are:

Phase 2 - 13 July 2020 in respect of central counterparties and central securities depositories.
Phase 3 - 13 October 2020 in respect of the Buy-side (insurance companies and funds).
Phase 4 - 13 January 2021 in respect of non-Financial Counterparties.