European Commission to endorse SFTR, with go-live 2020

The European Commission intends to endorse the draft regulation but will amend certain details ahead of implementation. 

By Joe Parsons

The European Commission (EC) has stated it intends to endorse the amendments made to the incoming securities financing transaction regulation (SFTR), with a Q1 2020 go-live date.

According to a policy statement issued by the EC, it said it will endorse the draft regulatory and implementing standards on the rules, however, it intends to amend certain details ahead of the go-live.

The EC said it cannot adopt two of the six standards submitted by the European Securities and Markets Authority (ESMA) in March last year.

“It is necessary to amend a particular provision in the implementing and regulatory technical standards on the details of SFTs that market participants have to report to trade repositories,” the EC stated.

ESMA previously stated that it also reserves the right to make particular changes in the future to mandate the use of legal entity identifiers (LEIs), however, the EC said only it reserves the right to make such amendments.

“The draft technical standards submitted by ESMA provide for the mandatory use of potentially forthcoming industry standards [LEIs for branches & UTIs for transactions] for reporting to TRs once these standards would be ‘endorsed by ESMA’ in the future…. the right to introduce changes to the reporting requirements due to potentially forthcoming industry standards remains with the Commission,” the EC added.

Nevertheless, the policy statement affirms that SFTR will be adopted by the first quarter of 2019, with a go-live date of Q1 2020.

The purpose of SFTR is to provide greater transparency on cross-asset class lending, borrowing, repurchase agreements and sale/buy-back agreements among counterparties in the EU.

Market participants active in repo and securities lending markets have not had to comply with reporting requirements before when engaging in these activities. 

SFTR will contain an estimated 150 reporting fields to fill in, and there will be a need for unique transaction identifiers (UTI) along with dual-sided reporting.