What is SFTR Transaction Reporting?
The Securities Financing Transactions Regulation (SFTR) is an EU and UK regulatory framework aimed at improving transparency and the ability of regulators to monitor the risks associated with Securities Financing Transactions (SFTs). SFTR aims to shed light on the leverage and liquidity impact of SFTs.
About SFTR Transaction Reporting
Firms are obligated to submit details of SFTs that they have concluded, modified or terminated to a trade repository (TR) on T+1 (trading day plus one business day). Both sides of the SFT must be reported to a TR but the obligations can be fulfilled by one party as long as it is indicated in the report and both reports are full and complete.
SFTR applies to all UK and EU Financial Counterparties (FC) and their branches that engage in (non-exhaustively):
| - Repo | - Securities borrowing / lending |
| - Margin lending | - Commodities borrowing / lending |
| - Collateral reuse | - Funding sources reports |
| - Cash reinvestment | - Buy-sell back / sell-buy back |
UK Alternative Investment Funds (AIF) do not need to report but their management firms (AIFM) do. Non-UK AIF do not need to report unless their branch deals in SFTs. Similarly, undertakings for the Collective Investment in Transferable Securities (UCITS) do not need to report but their management firms do. UK non-financial counterparties do not need to report.
Rely On Qomply To Help
Qomply has a variety of solutions to help firms comply with their regulatory SFTR Transaction Reporting requirements:
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Diagnostic Auditor - Ensure Reports Are Accurate
Apply 100+ accuracy, scenario-level and best practice checks across your SFTR Transaction Reports in a click and comply with SFTR requirements -
DualRec - Intelligent, automated trade reconciliation
Designed to support regulatory audits and examinations, DualRec ensures full traceability, clear audit trails, and confidence that your reporting controls are robust, defensible, and compliant. - Qomply Managed Services - Delegate Your Transaction Reporting Operations to Qomply
Qomply Managed Service alleviates the burden of technical expertise but also provides peace of mind that regulatory requirements are being met in a risk-free and cost-effective manner
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FAQs: SFTR Transaction Reporting
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A UK and EU transaction reporting regime that aims to provide greater transparency in the securities financing market, with the aim of enabling regulators to monitor this area more effectively – including for hidden leverage, collateral reuse, and systemic risk.
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SFTR reporting covers the following, non-exhaustive list of activities:
- Repo
- Securities borrowing / lending
- Margin lending
- Commodities borrowing / lending
- Collateral reuse
- Funding sources reports
- Cash reinvestment
- Buy-sell back / sell-buy back
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All UK and EU counterparties and their third country branches must report details of SFTs they have concluded, modified or terminated to a TR. Whilst Non-Financial Counterparties can report, if they are transacting with an FC, the FC will likely report for both sides – the purpose behind this measure was to introduce an element of proportionality for smaller firms dealing with larger ones.
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The default position is that both parties have reporting obligations, so SFTR is technically a double-sided reporting regime. However, in practice, it is common for one side to delegate their reporting obligation to the other, particularly if you have a smaller Non-Financial Counterparty interacting with a large FC, like a bank. Examples of this include fund managers reporting on behalf of funds, or financial counterparties reporting on behalf of smaller NFCs. It is also possible for SFTR reporting to be delegated to third parties.