What you need to know about the new Securities Financing Transaction Regulation

Hagen Tiller and Andreas Roussos

Journal of Securities Operations & Custody, 2018, vol. 11, issue 1, 14-25

Abstract: After the most recent economic recession in 2008– 2009, the European financial market has seen a great deal of regulatory changes. These changes have significantly impacted how firms, entities and counterparties operate and manage securities as well as manage and report transactions. In addition to the European Market Infrastructure Regulation (EMIR), the Markets in Financial Instruments Directive1 (MiFID II, 2014/65) and the Markets in Financial Instruments Regulation2 (MiFIR, 600/2014) entered into force. Securities Financing Transaction Regulation (SFTR), the newest regulatory change, aims to increase transparency by requiring all entities to report the specifics of their securities financing transactions (SFTs) to an approved European Union (EU) trade repository (TR). While the rules for these reports have not yet been officially finalised (at the time of this writing), these new rules will present a number of challenges to firms, entities, counterparties, TRs and investment companies. From data fragmentation to new costs related to disclosure requirements, all entities and counterparties will be required to adapt to these new obstacles sooner rather than later in order to be prepared for the planned start date in 2019. Furthermore, pending finalisation of the SFTR, all repos, securities loans, buy and sell back, total return swaps and similar transactions will need to be declared to an EU TR. Both financial and nonfinancial counterparties will be subject to these requirements. Aside from the challenges that the new SFTR regulation will likely impact firms, branches, entities, institutions, repositories and so on, there are also a number of basic solutions that can be utilised to mitigate challenges and risks and also successfully satisfy the new reporting requirements. This paper addresses the scope of SFTR, the overall impact, the challenges and even solutions to help entities and counterparties prepare for SFTR to go into force.

Keywords: SFTR; MiFID II; EMIR; transaction reporting; trade data; data reconciliation (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hstalks.com/article/4978/download/ (application/pdf)
https://hstalks.com/article/4978/ (text/html)
Requires a paid subscription for full access.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aza:jsoc00:y:2018:v:11:i:1:p:14-25

Access Statistics for this article

More articles in Journal of Securities Operations & Custody from Henry Stewart Publications
Bibliographic data for series maintained by Henry Stewart Talks ().