On 18 March 2020, the International Capital Markets Association (ICMA) and the International Securities Lending Association (ISLA) published a letter sent to the European Securities and Markets Authority (ESMA) asking for a delay to the upcoming application of reporting obligations under the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR).

Under Article 4 of the SFTR, reporting obligations apply for credit institutions and investment firms, effective from 11 April 2020. However, the ICMA and ISLA state that as this first reporting date coincides with an acceleration in the proliferation of the coronavirus disease (Covid-19), the impact on personnel involved in SFTR implementation programmes has led firms to believe that their ability to ensure compliance with the requirements from 11 April 2020 onwards has been critically compromised. The ICMA and ISLA also warn that the situation will get worse for some months while countries implement measures to mitigate the pandemic.

In light of these exceptional circumstances, the ICMA and ISLA ask ESMA to:

  • initiate, as a matter of urgency, the procedure for obtaining a formal delay of the SFTR reporting go-live date to an appropriate date that falls well outside the expected critical phase of the pandemic – they suggest a provisional date of 11 October 2020 (the reporting start date for the third phase of SFTR reporting); and
  • consider, in the absence of a formal delay, equivalent measures that would provide forbearance and sufficient reassurance for firms that they are not expected by ESMA and their respective national competent authority to ensure strict compliance with SFTR reporting obligations for an appropriate period of time following the legal reporting start date – again, the 11 October 2020 is suggested as being a reasonable reference point.

This follows a statement published by ESMA on 12 March 2020 in which it stated that it was prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection in light of the current Covid-19 pandemic.