European Securities and Markets Authority Publishes Final Secondary Measures for Reporting of Securities Financing Transactions

The European Securities and Markets Authority has published a report and final draft Implementing and Regulatory Technical Standards for the Securities Financing Transactions Regulation. The majority of the SFTR came into effect on January 12, 2016. One exception is a new reporting obligation for SFTs, which is in the process of being phased in according to counterparty type. Securities financing transactions involve the use of securities to borrow cash or other higher investment-grade securities, or vice versa. Such transactions can include repurchase transactions, securities lending and sell/buy backs. The SFTR requires, amongst other things, all securities financing transactions to be reported to EU recognized trade repositories, including details on the composition of collateral, whether collateral is available for reuse or has been reused, the substitution of collateral and any haircuts applied. The reporting obligation will apply to financial and non-financial counterparties, subject to exceptions for central banks and similar bodies.

ESMA's report sets out the background to ESMA's original proposals, a summary of feedback on those proposals and ESMA's final approach. The report also includes final draft RTS and ITS on the registration process for trade repositories, the format of reporting and the operational standards for the collection of data. The reporting regime under the SFTR will build on the system already in place for the reporting of derivatives transactions under the European Market Infrastructure Regulation.Due to certain overlapping requirements between EMIR and the SFTR, ESMA has also prepared amending RTS on the details of a trade repository's application for registration and on the publication and aggregation of data obligations of trade repositories.

The final draft RTS and ITS have been submitted to the European Commission for endorsement.

View the final report and final draft technical standards.