SFTR Reporting
ESMA regulates securities financing activities by setting out reporting requirements, data access, collection, verification, aggregation, comparison and publication of data on securities financing transactions (SFTs) by trade repositories (TRs).
Securities Financing Transactions Regulation refers to transactions that are related to, inter alia, the build-up of leverage, pro-cyclicality, liquidity and maturity transformation, and interconnectedness in the financial markets. SFTs include:
- a repurchase transaction;
- securities or commodities lending and securities or commodities borrowing;
- a buy-sell back transaction or sell-buy back transaction;
- a margin lending transaction.
SFTR overview
SFTR responds to the need to enhance the transparency of securities financing markets and thus of the financial system. The Regulation was published in the Official Journal of the European Union on 23 December 2015.
In order to ensure equivalent conditions of competition and international convergence, SFTR follows the FSB Policy Framework and creates a Union framework under which details of SFTs can be efficiently reported to trade repositories (TRs) and information on SFTs and total return swaps is disclosed to investors in collective investment undertakings.
It has been the legislators’ intention that SFTR leverages substantially on key aspects of EMIR such as, among others, the establishment of the reporting obligation, the registration requirements for TRs and the establishment of levels of access to data, building on the sufficiency of some of the controls in place for the already registered TRs.
In addition to laying down rules on the transparency of SFTs and on the operation of TRs, SFTR also introduces new rules on the transparency of collective investment undertakings towards investors in periodical reports and pre-contractual documents.
The new rules on transparency provide for the reporting of details regarding SFTs concluded by all market participants, whether they are financial or non-financial entities, including the composition of the collateral, whether the collateral is available for reuse or has been reused, the substitution of collateral at the end of the day and the haircuts applied.
Reporting
SFTR mandates reporting of all SFTs to TRs. TRs centrally collect and maintain the records of SFTs. They play a central role in enhancing the transparency of SFTs markets and reducing risks to financial stability.
Rules and guidance on implementing SFTR provisions
ESMA has developed detailed rules and guidance on reporting, registering, and accessing data.
What needs to be reported to TRs:
Legal entity identifier (LEI) codes should be used to identify counterparties which are legal entities. LEI can be issued by any of the Local Operating Units (LOU) of the global entity identifier system (GLEIS).
When reporting, counterparties should take also into account the Guidelines on reporting, the validation rules applied by TRs, as well as the ISO 20022 XML schemas to ensure that reporting is performed according to the SFTR regime, including the specifications of the Technical Standards on reporting and data collection, verification, aggregation, comparison and publication of data.
- COVID -19 Statement (updated on 26/03/2020)
- Guidelines on reporting under SFTR (updated on 21/12/2020, translations published on 29/03/2021)
- Final report on reporting under SFTR
- Validation rules under SFTR (updated on 08/03/2023, applicable from 11/09/2023)
- Validation rules under SFTR (updated on 29/07/2021, updates applicable from 31/01/2022)
- Q&As on SFTR Reporting (updated on 2 June 2023, published on 7 June 2023)
- LEI statement
- Updated LEI statement (published on 13 April 2021)
- Third LEI statement (published on 12 July 2022)
XML SFTR Reporting Schemas
- Counterparty and TR data exchange (updated on 08/03/2023, applicable from 11/09/2023)
- Counterparty and TR data exchange (updated on 21/03/2022, applicable from 02/05/2022)
- Counterparty and TR data exchange (updated 20/10/2021)
- Counterparty and TR data exchange
- Inter-TR data exchange (updated on 08/03/2023, applicable from 11/09/2023)
- Inter-TR data exchange (updated on 21/03/2022, applicable from 02/05/2022)
- Inter-TR data exchange (updated 20/10/2021)
- Inter-TR data exchange
- TR to authority data exchange (updated on 08/03/2023, applicable from 11/09/2023)
- TR to authority data exchange (updated on 21/03/2022, applicable from 02/05/2022)
- TR to authority data exchange (updated 20/10/2021)
- TR to authority data exchange
Data Quality
Key elements for the correct functioning of the reporting regime under SFTR and ensuring the quality of SFT reporting are (i) the validation by TRs of the data submissions by the counterparties that are subject to the reporting obligation, (ii) the reconciliation of data between TRs and (iii) the response mechanisms.
- Regulatory technical standards on the collection, verification, aggregation, comparison and publication of data.
- Guidelines on transfer of data between trade repositories under EMIR and SFTR
Accessing Data
The direct and immediate access to SFT data is essential to allow authorities to fulfil their responsibilities and mandates, whereas the adequate establishment of access levels for authorities ensures the confidentiality of the trade repository data.