ESMA clarifies reporting under the Securities Financing Transactions Regulation

The European Securities and Markets Authority (ESMA) has (i) published its final report and guidelines on reporting under the Securities Financing Transactions Regulation (SFTR), (ii) published a statement on Legal Entity Identifiers (LEI) and (iii) amended the SFTR validation rules.

The final report contains a detailed assessment of the feedback received to the proposals in the consultation paper published in May 2019, as well as a more detailed discussion on the market transactions that are not in scope.

The guidelines aim to (i) clarify a number of provisions of SFTR, (ii) provide practical guidance on the implementation of some of the provisions of SFTR and (iii) contribute to the reduction of costs along the complete reporting chain. The guidelines provide clarity as to the following aspects:

• the reporting start date when it falls on a non-working day;
• the number of reportable securities financing transactions (SFTs);
• the population of reporting fields for different types of SFTs;
• the approach used to link SFT collateral with SFT loans;
• the population of reporting fields for margin data;
• the population of reporting fields for reuse, reinvestment and funding sources data;
• the generation of feedback by trade repositories (TRs) and its subsequent management by counterparties, namely in the case of (i) rejection of reported data and (ii) reconciliation breaks; and
• the provision of access to data to authorities by TRs.

The LEI statement clarifies the expectations with regards to reporting of LEI for issuers of securities used in SFTs, as well as the relevant supervisory actions to be carried out by authorities.

Finally, ESMA has updated the SFTR validation rules. The amended SFTR validation rules are aligned with the updated XML schemas published in December 2019, as well as with the aforementioned LEI statement.