»Duties coming from complex regulatory requirements become harder to comprehend. We stay on top of things for you—subject-specific and technological.«
Arne Grotheer, Partner LPA
After having gone live with the EMIR, MSSR and MiFID II reporting, the pace of regulatory change shows no sign of decrease for financial institutions in Europe.
With the reporting obligations under article 4 of the Securities Financing Transaction Regulation (SFTR) a new challenge is waiting just around the corner. SFTR represents a significant change to the securities finance industry with a phased reporting obligation from April 2020.
It is clear that in order to comply with the new regulation, many financial services providers will need to change their existing processes and overcome many challenges.
The location of the full data set is currently highly fragmented, with no counterparty or system having all of the reportable data. Many of the required fields are allocated in various applications or currently not available in the required format, which could lead to data sourcing difficulties. The challenge for our clients is identifying, pulling together, harmonizing and controlling the full set of data in line with the field-specific reporting requirements.
SFTR Reporting requires TRs to match 62 reportable fields with no tolerance for difference on 52 of these fields. In some instances, the reportable data is currently captured i.e. classification of a security via ISO10692.
Effectiveness and Efficiency
Fragmentation of processes and reporting routes will complicate end-to-end solutions. Since SFTR also applies to counterparties outside the European Economic Area (EEA) there is a need for a multi-jurisdictional solution. Some firms will want to leverage their existing strategic regulatory reporting infrastructure, which are required to support the new regulation.
With the strict reconciliation rules, market participants will have to decide whether they will send all reportable data directly to the TR or if they integrate a reporting service/engine, that validates and enriches reporting sets before being send out to the TR.
For many years, LPA supports its clients in the financial industry as a trusted management and technology consultancy in the context of complex regulatory and IT-infrastructure driven projects.
Based on our SFTR expertise gained on already delivered projects we can leverage on our distinctive capital markets knowledge and extensive regulatory project experience to help you navigate along all relevant project phases.
Our offer includes:
Please do not hesitate to get in contact with us. In case of any questions or for further information, we will be happy to advise you.