The transparency of securities

financing transactions in the EU

Jennifer Robertson
Deputy Head of Unit
DG FISMA– Unit C2 Market Infrastructures
European Commission

10 September 2015
Capital Markets Union (CMU)

• EU capital markets are global

• Considerable progress has been made
• But inefficiencies, legal barriers, insufficient
competition remain.
• Markets need to work better for the
economy, delivering growth and jobs.
SFTR: what is it trying to achieve?

• Regulatory gaps, ineffective supervision,

opaque markets and overly-complex
products
• Need to improve the monitoring and
regulation of the 'shadow banking' sector
• Work has been undertaken at the
international and EU level
 Objective: more transparency

Reporting of Investment
SFTs Transparency fund's
to trade of transparency
repositories reuse
A. The reporting of SFTs to trade
repositories
Reporting of SFT to trade repositories

• Lack of data available for effective

monitoring of the systemic risk linked to
the security financing transactions
• Financial Stability Board (FSB) Policy
framework for Adressing Shadow Banking
Risks in Securities Lending and Repos ->
Recommendation 2
• ESRB Ocassional paper n°2, March 2013
 Building on EMIR framework but some
differences
• Reporting to trade repositories
• Reporting of transactions data
• All counterparties shall report (financial and non-
financial):
• But for certain non-financial firms, the financial
counterparty will be responsible for reporting
• Debt management agencies are exempted from
reporting
• All transactions with central banks are exempted
What should be reported?

• Repurchase transactions
• Securities or commodities lending and borrowing
• Buy-sell back transactions + sell-buy back
transactions
• Margin lending transactions

Details to be reported to be developed by ESMA in

cooperation with the ESCB.
Timing
• Entry into force of SFTR (date = T)
• Development of technical standards (T+12
months)
• Adoption of technical standards (T +/- 18
months)
• Date of application: +/- mid-2017
• Phased in application over approx.
2018/2019.
Trade repositories

• Based on EMIR framework

• Some variations compared to EMIR:
• TRs need to have procedures to verify the completeness and
correctness of details reported
• Enlarged list of entities that can access the data reported.
• Provision for a simplified registration procedure for
TRs already registered under EMIR.
B. The disclosure of SFTs by
invesment funds
Investment fund disclosures to investors

• FSB Recommendation 5: review fund's manager's

reporting of SFTs
• Include information in 1/2 yearly or Annual reports
• Specific information described in the Annex
• Dates of application:
• Half yearly and annual reports (12 months after entry
into force)
• Pre-investment documents:
• immediately (for new funds)
• + 18 months (for existing funds)
C. The transparency of reuse
The transparency of reuse
• More transparent use of reuse;
• The counterparty providing the collateral must be
informed of the risks and consequences of in writing;
• The counterparty providing the collateral must give its
express consent;
• When reuse occurs, the collateral shall be transferred
from the account of the providing counterparty.
Important step in improving transparency of
SFTs and reuse

 Will ensure access by regulators to granular data on

SFTs

 Will allow counterparties to be fully aware of the reuse

of their collateral

 Will ensure funds investors get more transparency on

SFTs
 Thank you

Jennifer.Robertson@ec.europa.eu