On 25 November 2020, the FCA issued a statement explaining what trade repositories (TRs), and the UK counterparties that use them, should do to make sure they are compliant with the UK Securities Financing Transactions Regulation (UK SFTR) reporting obligations from the end of the transition period.
The statement covers the following topics:
- What changes for UK counterparties?
- Temporary transitional powers: exception for SFTR reporting and TR requirements.
- Reporting of new and outstanding trades under the SFTR reporting regime by UK counterparties.
- UK SFTR validation rules.
- EU non-legislative material.
- What changes for TRs?
- Historic SFTR data.
- Inter-TR reconciliation under UK SFTR.
- Publication of TR data.
- Suspension of the reporting requirements.
In terms of the first item above concerning changes for UK counterparties, the statement notes that all UK SFTR counterparties that enter into securities financing transactions that are in scope of the UK SFTR are required to report details of those transactions to an FCA-registered, or recognised, TR. The FCA adds that:
- UK branches of third-country financial counterparties (including branches of firms from EU27 countries) are in scope of the SFTR reporting regime and are required to report under the UK SFTR.
- Third-country (including EU27) branches of UK established financial counterparties are in scope of the SFTR reporting regime and must report details of their securities financing transactions to an FCA-registered, or recognised, TR.
- UK non-financial counterparties (NFCs) (including third country branches of NFCs located in the UK) are not in scope of the UK SFTR reporting regime.
- Currently, third country (including EU27) alternative investment funds (non-UK AIFs) are not in scope of the UK SFTR reporting regime. This includes instances where a non-UK AIF is managed by an alternative investment fund manager that is authorised or registered under the UK Alternative Investment Fund Managers Regulations. However, securities financing transactions concluded in the course of the operations of a UK branch of a non-UK AIF are in scope of the UK SFTR reporting obligation
- No action is required by UK TRs in relation to Gibraltar counterparties (unless it is requested by those parties). However, TRs should confirm their position with the Gibraltar FSC in relation to the obligations imposed by the law of Gibraltar.