Industry bodies unite in SFTR guidance

Several markets have jointly published a statement offering advice on how participants can comply with new EU Securities Financing Transactions Regulation (SFTR).

The Association for Financial Markets in Europe, the FIA, the International Capital Market Association, the International Swaps and Derivatives Association and the International Securities Lending Association have all contributed to the testimonial.

Coming into force on July 13 this year, SFTR rules will 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.

Following its proposed implementation date on 13 July 2016, regulators are currently discussing further level 2 standards for SFTR.

Global Custodian understands that level 2 rules are set to be rolled out around 2018.

Industry experts have suggested that the regulations will have a significant impact on the industry.

“SFTR has not really been on the radars of many fund managers and we have only been fielding inquiries in the last few weeks. However, we anticipate the number of inquiries will increase significantly over time,” said Abigail Bell, partner at Dechert in London, speaking to Global Custodian earlier this year.

“As such, it is very difficult for fund managers to prepare until they have granular information around reporting,” said Bell.