08/10/2020

Amongst the requirements imposed by the SFTR is an obligation to report certain transaction data to trade repositories (legal persons that collect and maintain records of SFTs and derivative transactions subject to EMIR). The objective is enhanced transparency of the SFT market – one of the main goals the SFTR is meant to pursue (taking a similar approach as that under EMIR with respect to derivative transactions).

The reporting of SFTs is being introduced gradually, starting from 11 July 2020 with phased applicability depending on the type of counterparties involved. As of 12 October 2020, “phase 3” will start. In practice this means that from this date, the SFTR reporting obligation will become applicable to:

  • authorised insurance undertakings or reinsurance undertakings;
  • authorised UCITS and, where relevant, their management company;
  • authorised alternative investment funds managed by alternative investment fund managers;
  • authorised or registered institutions for occupational retirement.

Going forward, these entities will be required to report the details of the SFTs entered into to trade repositories.

The transactions which qualify as SFTs under the SFTR are repurchase transactions, securities or commodities lending transactions, securities or commodities borrowing transactions, buy-sell back and sell-buy back transactions, and margin lending transactions.

The relevant data for any transaction qualifying as an SFT must be reported no later than on the working day following the transaction’s conclusion, modification or termination. Which specific data must be reported has been clarified by way of regulatory technical standards (RTS).

Arendt & Medernach and Arendt Regulatory & Consulting combine their legal and operational strengths to offer a range of bundled and joint services in the fields of financial derivative instruments and securities financing transactions, as well as the associated regulatory background in Luxembourg.

Please feel free to contact us for further guidance on this topic.

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