ESMA hopes for minimal disruption and costs from SFTR

Market participants will not need to make wholesale changes in order to comply with upcoming SFTR regulations, according to the chair of ESMA.

In a speech made at the ISLA conference in Vienna, Steven Maijoor spoke of how ESMA aimed to minimise costs and disruption ahead of the implementation.

“SFTR is a new reporting regime, which will require certain adaptations to your systems,” said Maijoor.

“The co-legislators have indicated their intention to minimise additional operational costs for market participants by building on pre-existing infrastructures, and operational processes and formats.

“ESMA has learnt a lot from the EMIR experience, which was a major reporting regime introduced in a big-bang way in the EU in February 2014.”

Coming into force on 13 July this year, SFTR rules will bind all current and future transfer and security collateral arrangements to a variety of financial agreements.

These include all parties that accept collateral informing their counterparties of relevant risks involved in entering a title transfer arrangement or granting a right to reuse collateral under a security arrangement.

Maijoor’s comments also echo those made by EU Commissioner Jonathan Hill in April who spoke of a need to reduce disruption and the potential burden of becoming compliant with SFTR regulations.

Additionally, speaking at the NeMa conference in Dubrovnik last week, Deutsche Bank’s head of market advocacy Angus Fletcher suggested that the regulation would present a sizeable challenge from a reporting point of view.