Initial draft regulatory technical standards (RTS) of article 4 of the Securities Finance Transaction Regulation (SFTR) will not be released until Q4 2017, according to the International Securities Lending Association (ISLA).
The European Securities and Markets Authority (ESMA) is expected to present its final draft RTS to the European Commission (EC) in late March, making it unlikely the final RTS would come into force before Q4 of this year.
This would result in SFTR’s phase-in period beginning in Q4 2018, approximately one year after the final RTS come into force.
ISLA considers this to be the “smooth-sailing scenario” which may alter depending on the adoption process.
Despite a large number of remaining concerns with the new rules, voiced at a public hearing in November, ESMA is eager to close off the RTS without further delaying implementation, as it is already behind its mandated 13 January deadline.
Initially implemented in July 2016, SFTR rules 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.
Prior to initial implementation in July last year, ESMA chair Steven Maijoor spoke of how he aimed to minimise disruption ahead of SFTR implementation stating that “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.”