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FAQ: How should zero collateral be reported for margin lending under SFTR?

TRAction FAQ of the Month

As long as there is outstanding exposure, counterparties are required to report the relevant components of a margin loan. With that being said, the current technical standards do not allow for the reporting of cash collateral for margin loans. As a result, counterparties cannot report zero collateral for margin lending. In this case, counterparties should use the ISIN EU000A1G0EB6 (European Financial Stability Facility) as an agreed default value in field 2.78 (Identification of a security used as collateral) to report zero collateral for margin loans.

The above reporting method is in accordance with Article 5(2) of CIR (EU) 2019/363 and section 5.4.4 of the ESMA SFTR Reporting Guidelines. Please do not hesitate to contact us if you would like to discuss collateral reporting under SFTR.

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Quinn Perrott

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Quinn Perrott

Quinn is co-CEO and founder of TRAction and focuses on assisting clients in Europe, Asia and Australia to meet their regulatory requirements with trade and transaction reporting solutions as well as development of the best execution platform. With a background in IT, Quinn started in the financial markets as IT Manager for City Index. He then co-founded and worked as a General Manager at one of Australia’s largest margin FX and CFD providers. Quinn has provided educational sessions to Australia’s regulatory bodies in relation to operational aspects of derivatives and trading platforms.