Industry reacts to SFTR’s guidelines

January 8, 2020

The first phase of SFTR is due to come into force on 13 April for investment firms and credit institutions, and July for central counterparties and central securities depositories.

Dean Bruyns, senior director, message automation product management, at Broadridge, tells SLT that “a collective sigh of relief would have greeted the news that the ‘no LEI – no trade’ stance in third-country securities has been granted temporary relief”. “This gives the industry time to lobby the issuers of securities to ensure that they obtain LEIs by April 2021,” he adds.

Bruyns explains that another win for the industry came in ESMA’s acquiescence to industry consensus on the reporting of cash-driven securities lending transactions. The issue, he says, was that these trades have “more repo-like characteristics than traditional stock loans and fit better within the repo reporting template”. Following last year’s consultation on the matter, ESMA has now stated that these transactions should be reported as repos.

Sunil Daswani, senior securities lending and repo consultant at MarketAxess’ reporting subsidiary, Trax, tells SLT that there are still outstanding issues around front-load backloading, time-stamp validations, settlement (contractual versus actual), lifecycle events, haircuts, collateral quality, securities re-use and corporate actions in general.