On 10 February 2020, the International Securities Lending Association (ISLA) submitted a letter to the European Commission and the European Securities and Markets Authority (ESMA) regarding the Regulation on reporting and transparency of securities financing transactions (SFTR). Specifically the letter concerned the SFTR scope of non-EU alternative investment funds (non-EU AIFs), and its conflict in relation to the drafting of the Level 1 text.

The ISLA reports that the responses provided by the Commission as well as ESMA provide explicit confirmation that non-EU AIFs are not subject to the obligations set out in Article 4(1) SFTR, even if the alternative investment fund manager is authorised or registered in accordance with the Alternative Investment Fund Managers Directive, except in respect of SFTs concluded in the course of the operations of a branch in the EU of the non-EU AIF.