UK SFTR reporting obligation

All UK counterparties and their third country branches must report details of the securities financing transactions (SFTs) they have concluded, modified or terminated to an FCA-registered or recognised trade repository (TR) under the UK Securities Financing Transactions Regulation (SFTR) reporting requirements.

Note on UK SFTR reporting requirements

We have published a note highlighting our expectations of firms in relation to their UK SFTR reporting requirements following the end of the transition period.

Choosing a TR

UK SFTR trade reports may only be submitted to TRs registered or recognised by us. Visit our TR webpage

Who needs to report to a TR

UK SFTR counterparties that enter into SFTs that are in scope of the UK SFTR, must report details of those transactions to an FCA-registered or recognised TR.

UK branches of third-country financial counterparties (including branches of firms from EU27 countries) are in scope of the UK SFTR reporting regime and must report under the UK SFTR.

Third-country (including EU27) branches of UK established financial counterparties are in scope of the UK SFTR reporting regime and must report details of their SFTs to an FCA-registered or recognised TR.

On 23 June 2020, a Written ministerial statement was presented to Parliament confirming the UK approach to onshoring the SFTR.

The statement confirmed that given that systemically important NFC trading activity will be captured sufficiently through the other reporting obligations due to apply to financial counterparties, the UK will not implement or onshore the SFTR reporting obligation for non-financial counterparties (NFCs), which did not apply before the end of the transition period.

UK NFCs (including third country branches of NFCs located in the UK) aren’t in scope of the UK SFTR reporting regime.

Where a UCITS managed by a management company is the counterparty to SFTs, the management company is responsible for reporting on behalf of that UCITS.

Where an AIF is the counterparty to SFTs, its AIFM is responsible for reporting on behalf of that AIF.

Third country (including EU 27) Alternative Investment Funds (non-UK AIFs) are not in scope of the UK SFTR reporting regime. This includes instances where a non-UK AIF is managed by an Alternative Investment Fund Manager that is authorised or registered under the UK Alternative Investment Fund Regulations.

However, SFTs concluded in the course of the operations of a branch of a non-UK AIF, are in scope of the UK SFTR reporting obligation.

Details to be reported

The details to be reported are set out in the UK SFTR reporting technical standards (see the SFTR library). 

How to fulfil the UK SFTR reporting obligation

The UK SFTR reporting requirements leverage substantially key aspects of derivatives reporting under UK EMIR.

  • Both counterparties must report their side of the SFT unless one party can report on behalf of both counterparties, by prior arrangement. Where one report is made on behalf of both counterparties, the report shall indicate this.
  • The UK SFTR technical standards set out what information needs to be submitted for each of the counterparties, and what information shall be submitted only once.
  • Either counterparty to the SFT may delegate reporting to a third party (such as a third-party service provider).
  • Where one counterparty reports on behalf of another counterparty, or a third party reports an SFT on behalf of one or both counterparties, the information reported must include the full set of details that would have been reported had the contracts been reported separately by each counterparty.

Temporary transitional provisions

The Treasury has given UK financial regulators the power to make transitional provisions to financial services legislation for a temporary period. This is known as the Temporary Transitional Power (TTP).

We intend to apply the TTP on a broad basis. However, there are some areas where we won’t apply the TTP, including to key requirements for UK SFTR reporting obligations.

The TTP applies to SFTs where one of the counterparties is a member of the European System of Central Banks (ESCB).

For these transactions, the status quo is retained and UK counterparties don’t need to report these transactions under UK SFTR until 31 March 2022.

However, where firms are subject to UK MiFIR transaction reporting obligations, they will need to report these SFTs to us under the UK MiFIR, where the counterparty is a member of the ESCB.The Bank of England’s webpage confirms its approach to transitioning to post-exit rules and standards for which it is the applicable supervisor (for the purposes of UK SFTR, the reporting obligation for CCPs and CSDs).

Reporting LEI of the Issuer

Counterparties must report the Legal Entity Identifier (LEI of the Issuer in Fields 54 and 93 of Table 2 in line with the Annex of the UK SFTR reporting standards.

We note the different levels of LEI coverage between EEA and UK jurisdictions, and other jurisdictions more widely. So, until 13 April 2021, we will not prioritise supervision of this element of the UK SFTR validation rules. This will allow counterparties time to source LEI by liaising with issuers located outside the EEA and the UK.

UK SFTR validation rules

UK SFTR reporting counterparties and UK TRs should use the UK SFTR validation rules when submitting SFTs entered into from 11pm on 31 December 2020 onwards.

Suspension of the reporting requirements

The UK SFTR SI introduces a new power for us to suspend the UK SFTR reporting obligation for a period of up to 1 year, with the agreement of the Treasury.

The use of this suspension power is limited to the event that there are no FCA-registered or recognised TRs available for UK counterparties to report to.

Page updates

24/11/2020: Information added UK SFTR validation rules