DTCC reports 160 firms signed up to SFTR reporting service

DTCC confirmed it has now onboarded Citadel, Franklin Templeton, Nordea Investment Management and PIMCO to its SFTR reporting service.

By Joe Parsons

DTCC has confirmed more than 160 firms have signed up to use its securities finance trade repository service, as the industry anticipates the onset of tough new rules from April.

It stated that 138 clients have signed up to adopt its global trade repository (GTR) service for their securities finance trades, and more than 30 vendors have partnered with DTCC to meet the new regime.

At the end of last year, a number of global investment banks signed up to the service including Barclays, Goldman Sachs, JP Morgan and Societe Generale. DTCC confirmed it has now onboarded Citadel, Franklin Templeton, Nordea Investment Management and PIMCO to its SFTR reporting service.

Banks and broker dealers in Europe will have to comply with new requirements under the Securities Financing Transaction Regulation (SFTR) from April this year, which includes reporting on a total of 155 fields on a T+1 or S+1 basis. Exchanges and clearing houses will then be included from July, while for buy-side firms will have to comply from October.

“There are now only two months to go until the implementation of SFTR begins for the broker-dealer community and eight months until the compliance date for the buy-side,” said Val Wotton, managing director, product development and strategy, RDS, DTCC.

“Broker-dealers have made good progress in their readiness for SFTR implementation and our goal is to help support asset managers as they look to do the same. We’re ready to assist them as they prepare for this new mandate.”

DTCC opened industry-wide user-acceptance testing (UAT) for SFTR last October so that firms could benefit from an extended period of testing, and to increase their levels of preparedness for regulatory compliance on day one.

In January, the European Securities and Markets Authority (ESMA) published its final rules and guidelines on SFTR which included a one-year grace period for the legal entity identifier (LEI) requirements, a vital component to the reporting regime.

LEIs are needed for authorities to monitor the securities financing transactions (SFTs) and their consequent risk exposure. However, there are still significant gaps in global LEI coverage, as many SFTs issued from the US and Asia do not have an LEI.

This would result in significant difficulties for European-based beneficial owners, hedge funds, agent lenders, and tri-party agents in complying with the reporting rules, and could even lead to trades being rejected, therefore significantly narrowing the amount of acceptable collateral.

In order to mitigate this, ESMA stated it would grant a 12-month reprieve for market participants to provide an LEI for a security issued from a third-country when reporting their SFTs.

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