SFTR, the EU’s extensive reporting regime for
securities finance trades, is falling behind schedule.
A final draft of the complex regulatory technical standards
not expected to enter into force in this year’s
The hold-up comes after ESMA, the European regulator tasked
with implementing the new regime, delayed publication of the
standards until March, rather than January as planned.
This week securities lending trade body ISLA said the delay
means it is "unlikely" that the final RTS would enter into
force before the fourth quarter of 2017, triggering the
phase-in to begin a year later.
"These expectations are based on a smooth-sailing scenario,
and could well change depending on the adoption process," ISLA
experts wrote in a statement.
Alexander Westphal, director at capital markets trade body
ICMA, said the delay is welcome as it allows slightly more time
to consult market participants.
However, he added that the set-back means that the "overall
implementation timeline will slip".
Under SFTR, lenders and borrowers to report details
securities finance transactions (SFTS), which include repos and
Information on parties involved in a trade, principal
amount, currency, collateral assets, repo rate, lending fee,
margin lending rate, haircut and maturity date are all
The data will then be sent to a trade repository, giving
regulators a clearer view of the market.
Several SFTR concerns were voiced at ESMA’s
November meeting, including reporting of collateral re-use
which is seen complex and difficult due to the enormous scale
and frequency of SFTS.
In addition, the deadline for collateral reporting was
erroneously indicated as taking place on Value Date +1.
According to ESMA, the correct date for collateral reporting
should be on Value Date.
"In our opinion, the reporting of collateral on Value Date
is challenging for the securities lending market,"
experts at ABN Amro wrote at the end of last year.
Despite a large number of remaining concerns, ESMA is eager
to close off the standards without further delaying
implementation, as it is already well behind the 13 January
deadline mandated in the level 1 text.
ICMA’s Alexander Westphal said the organisation
is "acutely aware" of the scale of the SFTR reporting
The group has been working to facilitate implementation
through many of its existing work streams such as the work on
trade matching and affirmation.
An ICMA kick-off event with vendors is planned in early