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Virtual Forum Replay: SFTR for the Buyside

18 June 2020

On Wednesday, June 10, IHS Markit and Pirum lined up our leading partners to discuss the latest regulatory developments, operating model best practice and how we are currently working with buy-side leaders on the path toward SFTR compliance.

We are pleased to share a replay of the virtual forum, featuring an expert lineup of thought leaders from across the industry. Our panelists delivered thoughtful and engaging insights for firms that are now in the midst of implementing a solution in preparation for the upcoming July 13 and October 11 SFTR deadlines.

The replay is now available to be viewed here at your convenience.

In the meantime, we've consolidated the following list of key takeaways from the June 10th discussion. We hope you find value in these insights, and would be happy to arrange 1:1 discussions with our subject matter experts via on any of the below points:

Results of Pre-Production Testing via IHS Markit:

  • 41 organizations (out of 82+) are currently going through pre-production testing
  • 197 million records in UAT since April 1
  • 80.6% success rate reporting to Trade Repositories
  • Main Trade Repository rejections related to life cycle events sequencing, reference data versus GLEIF and missing fields, validations rules

Pros: What has worked better than expected to date?

  • Lessons learned from Mifid and EMIR have been positively applied to SFTR
  • Early engagement of industry bodies:
    1. Strong working group collaboration between ESMA, ICMA, ISLA, Trade Repositories and in-scope firms
    2. Cross-market best practices and sample reports have been made publicly available online for all market participants
  • Practical field-by-field approach
  • Pre-reconciliation

Cons: What has been more difficult than expected?

  • There are still some firms yet to begin pre-production testing due to late availability of testing guidelines
  • The mismatch in implementation speed between counterparties has impacted the matching
  • Consensus on operating process to solve matching breaks - needs to be agreed between counterparties
  • UTI Exchange: While IHS Markit platform for the majority of counterparties streamlines the process, ad-hoc requests present operational challenges
  • LEI of issuers: Good for EEA but gaps remain for the rest
  • Collateral reuse reporting is difficult to offer for Prime Brokers alongside their Delegated Reporting offering
  • Main reasons of NACKs from Trade Repositories: Action type, time stamp, missing LEIs

ESMA confirmed no further delay in SFTR go-live. They will be looking at :

  • First, the quality of the data they receive. They appreciate on this point the involvement of the Trade Repositories, ICMA and ISLA
  • The level on reconciliation, as ESMA highlighted it is a key element of the dual sided reporting
  • On the missing LEI of issuer, ESMA will wait and see the quality of the data they receive

Buyside POV: Recommended approach to SFTR project based on experience to date:

  • Be part of working groups led by ICMA and ISLA. Use the best practices defined by these groups.
  • Agree an operating model applied on renewed practices that are fit-for-purpose for this regulation.
  • Data sourcing - ensure you are sourcing the right data.
  • Plan for a lot of testing.
  • Bed iligent about counterparty outreach.

Buyside POV: How to solve main challenges faced by the buyside:

  • Leverage EMIR experience in testing and issues encountered
  • Begin conversations with counterparties early on
  • Look at missing or ambiguous data points
  • Maintain the static data going forward
  • Leverage the IHS Markit platform for the majority of counterparties, ad-hoc outreach for the tail if needed.

Delegated reporting offered by Caceis

  • Has a team working early on this regulation
  • Offers Middle Office services to the buyside including SFTR
  • Can report as a counterparty or third party
  • Current counterparties looking for Delegation are:
  • Phase 3 clients under pressure from Phase 1 counterparties needing to report
  • Clients looking for a centralized reporting solution

Please contact or visit SFTR Solutions to learn more.

You might also be interested in these additional insights from IHS Markit and our Partners

IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

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