Are You Ready for the Upcoming Changes to SFTR Validation Rules and XML Schemas?

Are you ready for the upcoming changes to SFTR validation rules and XML schemas?

European Securities and Markets Authority (ESMA) released updates to the Securities Financing Transactions Regulation (SFTR) validation rules and ISO 20022 XML schema on 29 July 2021. The updated validation rules will take effect from 31 January 2022 for European-based firms and 14 April 2022 for UK-based firms. Now is the time to get ready for the changes.

What are some of the validation rule updates?

The updates to the validation rules aim to provide further clarification surrounding the loan and collateral fields and also add/remove certain requirements. For example:

Field NumberField NameWhat's the update?
1.10Entity responsible for the reportNow mandatory for all action types for all SFTs.
2.1UTINow mandatory for margin lending if the action type is collateral update (COLU).
2.54LEI of the issuerLEI of the issuer of the security for security lending pertains to a legal entity and not a branch.
2.74Value date of collateralNow optional for collateral updates and corrections.
2.88Collateral market valueNow allows negative value.
2.98Action typeETRM and POSC can only be reported once for a given UTI and pair of counterparties.

What do you need to do?

If you have already been self-reporting to a trade repository (TR) under the SFTR regime, you will need to implement the updated validation rules and carefully read through the XML schema from your TR. Then make any necessary changes to your existing reporting logic and code. When your TR’s User Acceptance Testing (UAT) is available (December 2021 for DTCC), we recommend you undertake testing to ensure a hassle-free go live on 31 January 2022 (Europe) or 14 April 2022 (UK).

If you are using a reporting delegate like TRAction, you are in an advantageous position as you won’t need to go through all the hard manual work that your counterparts who are self-reporting will have to. We recommend you get in touch with your reporting delegate as early as possible to find out if you will be required to provide any additional data or make any changes on your end.

TRAction upholds its promise to clients ‘Trade Reporting Simplified’ and takes care of all the changes to the validation rules and XML schema. Except certain additional data that we might require from our clients, they can still submit the files as it is.

SFTR Data Quality Issues

SFTR regime is relatively new as compared to EMIR and MiFIR regimes. Upon the first anniversary of the regime’s go-live on 13 July 2020, ESMA and various industry bodies conducted analysis on the SFTR public data in terms of its value and usability.

ESMA’s report released earlier this year shows more effort is required from the industry to improve SFTR trade data quality and also sheds light on why firms are failing to produce high quality trade data.

In September 2021, International Capital Market Association (ICMA) also published an analysis report on SFTR data on repo which identifies a list of issues including but not limited to:

  1. repo collateral data shows massive fluctuation between gross under- and over-collateralisation; and
  2. the aggregated public data appears to double-count loans where both counterparties have reported under the same regime.[1]

Hence, the updated validation rules and XML schema aim to enhance data harmonisation and achieve greater consistency with the SFTR guidelines.

If you have any questions or concerns, please feel free to get in touch with our team.

[1] Page 13 of ‘The first year of SFTR public data on repo’ report published by ICMA.

Article Author:


Stay in the Know

Recent Articles:

Meet Mayank
About TRAction

Meet The Team: Mayank

For this Friday’s Meet the Team Series we bring you our Software Developer…

ASIC Consultation

Change to ASIC Derivative Reporting Gets Closer to Finalisation

ASIC is stepping closer to its final version of reform to its reporting requirements for derivative transactions. Further details of their proposals have been outlined in ASIC’s second Consultation Paper (CP) Proposed Changes to simplify the ASIC Derivative Transaction Rules (Reporting) 2013, incorporating further changes after its first round of consultation released in November 2020.

Meet Atria
About TRAction

Meet the Team: Atria

A new week, a new team member – our newest team member in fact. Introducing you to our Operations Assistant… Atria Ong

Trade Reporting

Trade Reporting for Foreign Payment/Money Transfer Providers

Globally there are a host of foreign exchange brokers which allow their customers to move currency to and from different countries and currencies. These companies are subject to different requirements based on the jurisdiction where they are based and the role they play in the market.

Want to know why over 400 firms report their trades through TRAction?

Contact us to simplify your trade and transaction reporting.