United Kingdom (and EU regulation)

ESMA final report and guidelines on SFTR reporting

On 6 January 2020, the European Securities and Markets Authority (ESMA) published papers relating to the Securities Financing Transactions Regulation (SFTR)

Final report on guidelines on reporting under Articles 4 and 12 of the SFTR. The final report provides a detailed assessment of the feedback received to ESMA’s consultation paper published in May 2019, as well as a more detailed discussion on the market transactions that are not in scope. In particular, section 3 of the final report contains an assessment of the feedback to the general principles that apply to securities financing transaction (SFT) reporting, including how the SFT reports should be constructed, in what circumstances and how many SFT reports should be sent. It also covers the feedback relating to the number of SFTs that are reportable, the different action types to be used for reporting, the timeliness of reporting of conclusion, modification and termination of an SFT, certain exclusions from the meaning of SFTs and implications for third country firms concluding SFTs via their EU branches. Section 4 of the final report refers to the feedback on the use cases relating to the population of the tables of fields to be reported under the SFTR, explaining how the relevant fields for particular topics should be reported, including how the tables should be populated for the different types of SFTs. Sections 5 and 6 provide an assessment of the feedback on the clarifications relating to the rejection and reconciliation feedback that counterparties would receive from trade repositories and how this should be treated.
Guidelines on reporting under Articles 4 and 12 SFTR. The guidelines apply to counterparties to SFTs as defined in Article 3(2) SFTR, the trade repositories as defined in Article 3(1) SFTR and Member State competent authorities.The guidelines apply in relation to the SFT reporting obligation as provided in Article 4 SFTR, the trade repository obligations under Articles 5(7) and 12 SFTR, as well as the reporting start date as determined by Article 33(2) SFTR.
The guidelines provide clarity on the following: (i) the reporting start date when it falls on a non-working day; (ii) the number of reportable SFTs; (iii) the population of reporting fields for different types of SFTs; (iv) the approach used to link SFT collateral with SFT loans; (v) the population of reporting fields for margin data; (vi) the population of reporting fields for reuse, reinvestment and funding sources data; (vii) the generation of feedback by trade repositories and its subsequent management by counterparties, namely in the case of (a) rejection of reported data and (b) reconciliation breaks; and (viii) the provision of access to data to authorities by trade repositories.

The guidelines apply from the day following their publication on the ESMA website or from the date on which the relevant provisions to the entities as determined by Article 33(2) SFTR apply, whichever is later.

The counterparties, entities responsible for reporting and the report submitting entities are encouraged to use the guidelines starting from the first day on which the relevant reporting obligation in accordance with Article 33(2)(a) SFTR becomes applicable.
Statement on the implementation of the legal entity identifiers (LEIs) requirements under the SFTR reporting regime. The statement clarifies the expectations with regards to reporting of LEI for issuers of securities used in SFTs, as well as the relevant supervisory actions to be carried out by authorities.
Amended SFTR validation rules. The amended rules are fully aligned with the updated XML schemas published in December 2019, as well as with the above LEI statement.