The final RTS/ ITS pose various reporting requirements and implementation challenges on the market participants being counterparties to a SFT, which now need to be addressed within the remaining time until Go-live:
Data Availability and Consistency
- Data universe: 153 different fields need to be sourced, with not all fields are applicable to all SFT types.
- Matching requirements: Majority of fields must match with other counterparties’ record with no or low tolerance levels (e.g. timestamp, UTI, market value,…)
- Data Sourcing: Data are dispersed across front- to backoffice systems – reliance on external parties e.g. like CCPs or trading venues
Knowledge of counterparty required
- On-behalf reporting: Financial Counterparties are required to report on behalf of smaller Non-Financial Counterparties (“On-behalf Reporting”).
- Management Companies (ManCos): Management Companies of AIF and UCITs are required to report on behalf of their funds (“On-behalf Reporting”).
- Transactions with ESCB members: SFTs concluded with an ESCB entity or BIS are not reportable under SFTR, however will usually trigger a reporting obligation under Art. 26 MiFIR.
- Methodology: Linking of SFTs via UTI, Collateral Reporting based either on trade level or on net exposure
- Reporting in ISO20022 format
- Determination of correct action type for message to TR based on lifecycle of a SFT and report section – 10 action types available with 32 combinations depending on type of SFT and fields affected
- Strict reporting timelines: Reporting by t+1 after initiation/ modification/ termination. Collateral to be reported based on EoD snapshot as soon as its allocation is known but no later than value date +1 if not known at the reporting deadline
- Backloading requirement: Certain outstanding SFTs need to be backloaded into the TR within 190 days after the reporting start date.
- Recordkeeping: All records need to be kept at least 5 years beyond SFT-termination.