Since 13 July 2020, investment firms have been required to report Securities Financing Transactions (SFTs) to an authorised Trade Repository (TR) under Article 4 of the Securities Financing Transactions Regulation (SFTR). Due to Brexit, the EU regulations have been onshored as UK SFTR under the European Union (Withdrawal) Act 2018. In this page, SFTR refers to both EU and UK SFTR unless otherwise specified.
The scope of SFTR reporting includes:
- A repurchase transaction (REPO);
- Securities or commodities lending and borrowing;
- A buy-sell back transaction or sell-buy back transaction; and
- A margin lending transaction.
Who has reporting obligations?
Both Financial Counterparties and Non-Financial Counterparties* have reporting obligations, which cover the following:
- EU based entities including all its branches irrespective of where they are located; and
- Non-EU entities where the SFT is concluded by an EU based branch.
Reporting obligations for non-financial counterparties (except NFC-) commenced on 11 January 2021.
Only Financial Counterparties have reporting obligations, which cover the following:
- All UK based entities; and
- Third country branches of UK based entities.
Non-Financial Counterparties don’t have the reporting obligations.
Mandatory delegated reporting under EU SFTR
If the transaction was entered between a financial counterparty and a small non-financial counterparty (NFC-), the financial counterparty is required to report for both sides.
A NFC- means a non-financial counterparty which does not exceed the limits of at least 2 of the 3 following criteria:
(a) balance sheet total: EUR 20 000 000;
(b) net turnover: EUR 40 000 000;
(c) average number of employees during the financial year: 250.
Who do you report to?
Authorised Trade Repositories (TRs) under SFTR.
When do reports have to be made?
Reports are required to be submitted to an authorised TR by no later than one working day after the SFT has been made (T+1).
What information needs to be reported?
The SFTR will require the following information to be included:
- Counterparty data, including Legal Entity Identifiers (LEIs)
- Loan and collateral data, including Unique Transaction Identifiers (UTIs)
- Margin data
- Reuse information
SFTR will also apply to outstanding trades
For the transactions that are entered on or before the reporting start date, they must be reported if they either:
(a) have a remaining maturity exceeding 180 days after the reporting start date; or
(b) have an open maturity and actually remain outstanding for 180 days after the reporting start date. In this case, the transactions must be reported within 190 days of the reporting start date.
How can TRAction assist you with the SFTR reporting?
TRAction provides clients with delegated reporting solutions in accordance with the reporting requirements outlined above. If you are wondering how much we charge, see our pricing schedules here.
If you would like to get further information, feel free to contact us.