We explain the UK Securities Financing Transactions Regulation (SFTR) reporting requirements and what they mean for your firm.
All UK counterparties and their third country branches must report details of the securities financing transactions (SFTs) they have concluded, modified or terminated to an FCA-registered or recognised trade repository (TR) under the UK SFTR reporting requirements.
Amended UK SFTR Validation Rules and XML Schemas
On 1 August 2023, we published draft amendments to the Validation Rules and XML schemas to support the ongoing reporting of securities financing transactions under the UK Securities Financing Transactions Regulation (UK SFTR). The amendments are in response to industry feedback and to address data quality issues.
On 23 October 2023, we published final versions of these documents that will go-live on 25 November 2024.
UK SFTR Validation rules[1] (applicable from 25 November 2024).
XML Schemas under UK SFTR (applicable from 25 November 2024).
UK SFTR errors and omissions notification form
UK SFTR errors and omissions notification form[4]
You can use this form to notify us about any errors or omissions in your reports under Art. 4 of UK SFTR.
You should note the following when completing the form:
- If you have provided date(s)/timeframe(s) by which you intend to complete remediation of the reported issues, back report the impacted transactions, and/or carry out improvements in your systems and controls, we request an update is sent to us by the stated date(s)/timeframe(s).
- If you are taking a multi-stage approach to remediation and have provided any date(s)/timeframe(s) by which the individual stages are expected to be completed, we request periodic updates by the stated date(s)/timeframe(s).
- If you have been unable to fully answer any of the questions in the form but have stated a date(s)/timeframe(s) by which a complete answer will be available, we request that further information is sent to us by the stated date(s)/timeframe(s).
Note on UK SFTR reporting requirements
We have published a note[5] highlighting our expectations of firms in relation to their UK SFTR reporting requirements following the end of the transition period.
Choosing a TR
UK SFTR trade reports may only be submitted to TRs registered or recognised by us. Visit our TR webpage[6].
Who needs to report to a TR
UK SFTR counterparties that enter into SFTs that are in scope of the UK SFTR, must report details of those transactions to an FCA-registered or recognised TR.
UK branches of third-country financial counterparties (including branches of firms from EU27 countries) are in scope of the UK SFTR reporting regime and must report under the UK SFTR.
Third-country (including EU27) branches of UK established financial counterparties are in scope of the UK SFTR reporting regime and must report details of their SFTs to an FCA-registered or recognised TR.
On 23 June 2020, a Written ministerial statement[7] was presented to Parliament confirming the UK approach to onshoring the SFTR.
The statement confirmed that given that systemically important NFC trading activity will be captured sufficiently through the other reporting obligations due to apply to financial counterparties, the UK will not implement or onshore the SFTR reporting obligation for non-financial counterparties (NFCs), which did not apply before the end of the transition period.
UK NFCs (including third country branches of NFCs located in the UK) aren’t in scope of the UK SFTR reporting regime.
Where a UCITS managed by a management company is the counterparty to SFTs, the management company is responsible for reporting on behalf of that UCITS.
Where an AIF is the counterparty to SFTs, its AIFM is responsible for reporting on behalf of that AIF.
Third country (including EU 27) Alternative Investment Funds (non-UK AIFs) are not in scope of the UK SFTR reporting regime. This includes instances where a non-UK AIF is managed by an Alternative Investment Fund Manager that is authorised or registered under the UK Alternative Investment Fund Regulations.
However, SFTs concluded in the course of the operations of a branch of a non-UK AIF, are in scope of the UK SFTR reporting obligation.
Details to be reported
The details to be reported are set out in the UK SFTR reporting technical standards (see the SFTR library[8]).
How to fulfil the UK SFTR reporting obligation
The UK SFTR reporting requirements leverage substantially key aspects of derivatives reporting under UK EMIR.
- Both counterparties must report their side of the SFT unless one party can report on behalf of both counterparties, by prior arrangement. Where one report is made on behalf of both counterparties, the report shall indicate this.
- The UK SFTR technical standards set out what information needs to be submitted for each of the counterparties, and what information shall be submitted only once.
- Either counterparty to the SFT may delegate reporting to a third party (such as a third-party service provider).
- Where one counterparty reports on behalf of another counterparty, or a third party reports an SFT on behalf of one or both counterparties, the information reported must include the full set of details that would have been reported had the contracts been reported separately by each counterparty.
Reporting LEI of the Issuer
Counterparties must report the Legal Entity Identifier (LEI of the Issuer in Fields 54 and 93 of Table 2 in line with the Annex of the UK SFTR reporting standards.
We note the different levels of LEI coverage between EEA and UK jurisdictions, and other jurisdictions more widely. So, until 13 April 2021, we will not prioritise supervision of this element of the UK SFTR validation rules. This will allow counterparties time to source LEI by liaising with issuers located outside the EEA and the UK.
UK SFTR validation rules
UK SFTR reporting counterparties and UK TRs should use the UK SFTR validation rules[9] when submitting SFTs entered into from 11pm on 31 December 2020 onwards.
Suspension of the reporting requirements
The UK SFTR SI introduces a new power for us to suspend the UK SFTR reporting obligation for a period of up to 1 year, with the agreement of the Treasury.
The use of this suspension power is limited to the event that there are no FCA-registered or recognised TRs available for UK counterparties to report to.
