Survey finds SFTR is leading to regulatory reporting consolidation

A survey conducted by IHS Markit and Pirum has found over 70% of regulatory respondents plan to consolidate their diverse reporting processes under a single platform.

According to IHS, the survey – which had over respondents – showed that the consolidation following the implementation of the Securities Financing Transaction Regulation (SFTR).

SFTR – which went live in April 2020 – requires companies to report their SFT transactions to an approved trade repository.

The research found that 54% of the firms surveyed have used the SFTR implementation as a catalyst for rethinking their regulatory reporting processes for several regimes, such as the European Market Infrastructure Regulation and the Markets in Financial Instruments Directive.

Meanwhile, 79% of respondents stated that they acknowledged they have additional reporting requirements since SFTR was launched.

Other insights from the survey included 90% of respondents saying that Brexit had a limited impact on their securities financing transactions as the proactive planning conducted before Brexit ensured that trades could be split for UK and EU reporting requirements.

Also, 87% of respondents said they were currently experiencing little to no challenges following SFTR implementation, while 67% claim they were fully or almost ready with a complete SFTR solution at the time of go-live – with only 10% completely unprepared.

Up to 80% of those surveyed said they have been able to successfully pair all or most unique transaction identifiers (UTI), while only 28% said they were satisfied with their current UTI pairing efforts.

On the topic of SFTR reporting collateral, 45% said they are successfully reporting collateral to trade repositories. However, only 28% stated they were experiencing moderate challenges and 27% had significant challenges.

With data sourcing, 78% of respondents said they have overcome the majority of challenges on sourcing the right data from their internal/upstream systems and are receiving large rates of acknowledged messages from trade repositories.

Up to 73% of those surveyed also said they have overcome most of the challenges related to lifecycle processes, while a much smaller 27% stated they are still struggling to manage them.

Furthermore, 70% of sell-side businesses surveyed remarked that they currently or plan to provide delated reporting to the clients, and close to 50% are at the moment focusing efforts on strengthening reconciliations and the resolution of reconciliation breaks between trade repositories.

IHS said that it believes SFTR ‘will likely serve as a model for future regulatory reporting requirements’.

IHS Markit SVP of equities and regulatory reporting Pierre Khemdoudi said, “It is clear that while the implementation of SFTR was complex in many ways, market participants rose to the occasion and successfully navigated challenges through innovation. As firms recognize the value of streamlined reporting and the need for data harmonisation, there is a strong opportunity to leverage enhanced analytics for greater insights on transactions.”

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