Proposed EU Guidelines for Reporting of Securities Financing Transactions

The European Securities and Markets Authority has published a consultation paper proposing guidelines for reporting of securities financing transactions under the Securities Financing Transactions Regulation. SFTs 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, that all securities financing transactions be reported to EU recognized trade repositories. Such reports must include 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, and will be phased-in according to type of entity:

• banks and investment firms from April 11, 2020;
• CCPs and central securities depositories from July 11, 2020;
• other Financial Counterparties from October 11, 2020; and
• Non-Financial Counterparties from January 11, 2021.

ESMA is proposing guidelines to complement the technical standards to ensure the consistent implementation of the new SFTR reporting requirements. The guidelines cover:

• the number of reportable SFTs;
• the population of reporting fields for different types of SFTs, for margin data and for reuse, reinvestment and funding sources data;
• linking SFT collateral with SFT loans;
• the management by counterparties of feedback from trade repositories, where there is a rejection of reported data or of reconciliation breaks; and
• the provision of access to data to authorities by trade repositories.

The consultation closes on July 29, 2019. ESMA intends to publish the final guidelines in Q4 this year. The guidelines will apply from April 11, 2020 to all counterparties subject to the SFTR reporting obligation, to trade repositories and to relevant national regulators.

View the consultation paper.

View details of the SFTR reporting technical standards.

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