Securities Financing Transactions Regulation (SFTR)

The Securities Financing Transactions Regulation (SFTR) introduces requirements to improve transparency and monitor the risks associated with the securities financing transactions market. See our overview of the Regulation. 

Register for email updates from the FCA

You can register to receive email updates on SFTR from us. These include:

  • information on the SFTR implementation
  • alerts when new documents or further guidance are published, and 
  • further details about the process for making notifications and applying for exemptions in the UK

To register to receive updates, email your name and contact details (including email address) to [email protected].

Unsubscribe at any time by emailing ‘unsubscribe’ and your name and email address to the same address. 

Coronavirus: our approach to supervising reporting under the Securities Financing Transactions Regulation

26 March 2020

On 26 March ESMA updated its statement on the implementation of SFTR, providing further clarity on the backloading requirement. We have updated our supervisory approach to align with ESMA’s, and clarified this in the statement below.

20 March 2020

The European Supervisory & Markets Authority (ESMA) has published a statement addressing the challenges firms are facing to meet their reporting requirements under the Securities Financing Transactions Regulation (SFTR) before the 13 April 2020 implementation date, at a time where firms are facing significant challenges due to the coronavirus pandemic.

In its statement, the ESMA expects national Competent Authorities to not prioritise supervisory activity towards firms’ compliance with the SFTR reporting obligation between 13 April 2020 and 13 July 2020. This also applies to the requirement for firms to report securities financing transactions (SFTs) under the Markets in Financial Instruments Regulation (MiFIR) when their counterparty is a member of the European System of Central Banks. ESMA also confirmed it will not prioritise trade repository registration ahead of 13 April 2020 but it will ensure TRs are registered before 13 July 2020.

We support ESMA's statement. To allow firms to focus their resources on critical functions during this period, we will not prioritise supervision of these reporting requirements until at least 13 July 2020. We will not require firms to back report any securities financing transactions that are concluded between 13 April 2020 and 13 July 2020. In addition, we will not prioritise supervision relating to the reporting of SFTs for firms to which the backloading requirement specified in Article 4(1)(a) applies.

Firms in scope of the first 2 application phase-in dates should continue to plan to meet their requirement to report securities financing transactions under SFTR and MiFIR from 13 July 2020.

We will continue to keep this situation under review.

SFTR, Brexit and the transition period

Having left the EU, the UK has now entered a transition period which is due to operate until 31 December 2020. During the transition period, EU law will continue to apply in the UK.

SFTR directly applies in the UK during the transition period. We refer to this regime on this webpage as EU SFTR. At the end of the transition period this Regulation will convert into UK law (be onshored) under the European Union (Withdrawal) Act 2018 (EUWA). The regime after the end of the transition period is referred to below as UK SFTR.

On 23 June 2020, a Written Ministerial Statement was presented to Parliament, further confirming the UK approach to onshoring the SFTR. The statement confirmed that the UK will not implement the SFTR reporting obligation for non-financial counterparties (NFCs).

As a result, we will not require NFCs established in the UK to put in place arrangements to meet the reporting obligation under the onshored UK SFTR regime. 

This approach is subject to any further statements that HM Treasury or we may issue.

Trade repositories (TRs) registration for UK SFTR

On 30 April 2020, the Treasury confirmed that they intended to bring forward legislation before the end of the transition period which will be similar to the Trade Repositories Regulations.

It will allow TRs who wish to offer services under the UK SFTR to register with the FCA, or apply in advance, and operate in the UK immediately after the end of the transition period.

Details on the registration process, and draft forms for TRs, are published on the Trade Repositories page. TRs should let us know by email if they intend to offer UK SFTR services to UK markets from the end of the transition period. 

EU SFTR

EU SFTR implements recommendations following the Financial Stability Board (FSB) review of the shadow banking sector after the financial crisis. The Regulation applied in part from 12 January 2016 and aims to improve transparency of securities financing transactions.

It imposes requirements on all types and sizes of EU and UK entities who enter into securities financing transactions (SFTs) such as repo transactions, securities lending transactions, margin lending transactions and commodities lending transactions. It also applies to non-EU and non-UK firms if the securities financing transaction is concluded through an EU or UK branch.

In addition, EU SFTR has registration and operational requirements for TRs offering SFTR repository services, and defined levels of access to data for different authorities.

EU SFTR requires entities that are in-scope to:

  • report details of their SFTs to a registered or recognised TR
  • in the case of funds, meet disclosure requirements relating to the use of securities financing transactions and total return swaps in pre-investment documentation and regular reports to investors
  • comply with disclosure obligations to counterparties in relation to the re-use of collateral
     
Implementation timetable
11 April 2020 Reporting obligation becomes applicable for phase 1 firms.
11 April 2019 Technical standards in relation to reporting requirements and requirements for TRs entered into application.
13 July 2017 Disclosures by funds on the use of securities financing transactions entered into application (for pre-contractual documents).
13 January 2017 Disclosures by funds on the use of securities financing transactions entered into application (for periodic reporting).
13 July 2016 Conditions for re-use of collateral entered into application.
12 January 2016 SFTR came into force.

SFTR Queries

Firms can email [email protected] for any SFTR queries.