With highly fragmented data in the market, especially where agents are involved in the day to day operations on the collateral side, the gathering of all relevant data within the tight reporting deadline (t+1) will be one of the key challenges. However, SFTR continues to employ identifiers like LEI and UTI that have become market standards through EMIR and also MiFID II. Firms with established data management processes to support these regulations will be able to leverage them for SFTR as well.
SimCorp’s Regulatory Center of Excellence is already deep in analysis of currently available information and prototyping of a solution. It will be designed with an intelligent data mart at its core where all required data from the relevant business areas within SimCorp’s integrated investment management software is combined and stored in the reporting format. Some SFTR reporting fields can’t just be mapped to existing data and hence this process will apply specific business logic to enrich and derive these fields.
Through connectivity to the Trade Repositories the data will be submitted, and the responses stored in the data mart. In close collaboration with market leading Trade Repositories DTCC and REGIS-TR, who have signaled to be applying as TRs under SFTR, setups are being designed and key fields discussed. It is recommended that affected firms start looking into the topic as soon as possible, to determine if they are affected and if so whether they are in possession of all the data needed for a smooth reporting start. Hence, a first short assessment whether you are affected or not is advised. A few key questions that may help in determining the impact of SFTR for your firm are:
- Are an EU firm or a non-EU firm that trades through an EU branch?
- Do you trade in products covered by SFTR (Securities and commodities lending and borrowing, Repo, Buy-Sell back, Sell-buy back, Margin lending)?
If you answer yes to both questions, chances are you will have to report. The earlier you start preparing, the better. On that note, please feel free to contact SimCorp early in the process to benefit from our experience in delivering transaction reporting solutions and to tap into a strong network of affected clients.
If you feel like reading the regulation itself, you can read it here.