SFTR

SFTR Annual
2019/20
THE GLOBAL
TRADE
REPOSITORY
(GTR)
THE SECURITIES FINANCING & DERIVATIVES

EXPERTS IN TRADE REPORTING
Ask us about our SFTR solution.
DTCC.COM/SFTR
Editor’s Note
The final countdown

While the clock is ticking down on the Securities Financing
Transaction Regulation implementation date, the industry is—or at Publisher: Justin Lawson
least should be—preparing for the Q2 2020 deadline. justinlawson@securitieslendingtimes.com
SFTR is set to be the most challenging and complicated reporting Editor: Becky Butcher
regime the securities finance industry has seen, will things ever be beckybutcher@blackknightmedialtd.com
the same again?
Reporter: Maddie Saghir
Market participants have encouraged the rest of the industry to maddiesaghir@blackknightmedialtd.com
collaborate and communicate together during the implementation
stages of SFTR. Many have already taken action, with various Reporter: Jenna Lomax
firms teaming up to form working groups or to create combined jennalomax@blackknightmedialtd.com
SFTR solutions.
Contributor: Barney Dixon
There is still a lot of concern within the industry that firms have
taken too few steps to prepare for the incoming regulation Creative Director: Steven Lafferty
deadline. A survey, conducted by IHS Markit in May, suggested that design@securitieslendingtimes.com
over half of those that responded are yet to select a vendor.
In this, the second SFTR Annual, find out how various areas of the
industry are dealing with the copious amounts of work needed to
become compliant in time for the April 2020 deadline.
Also, read opinion and insight from specific areas of the industry,
as well as a broader spectrum. www.securitieslendingtimes.com
Twitter: @SLTimes_
Thank you to all our partners, whose sponsorship and help has
been instrumental in putting this handbook together. If you have
any comments or suggestions for future issues, please don’t Office fax: +44 (0)20 8711 5985
hesitate to drop us a line. Published by Black Knight Media Ltd
Copyright © 2018 All rights reserved
Becky Butcher
Editor
www.securitieslendingtimes.com 3
Contents
Industry Collaboration SFTR Outlook

Richard Colvill of ISLA discusses how the association Jonathan Adams of Delta Capita discusses if the SFTR
is helping the industry prepare for SFTR and how its regulation will ultimately deliver more efficiency and
steering committee shapes the future of securities lending transparency to the securities finance market
page 8 page 12
Risk Exposure SFTR Wonderland

Sunil Daswani of Trax discusses how its platform can help Martin Walker of Broadridge discusses how firms
to mitigate the regulatory risk exposure arising from SFTR should open their eyes to the consequences of failing
to adequately prepare for SFTR implementation
page 16 page 20
Compliance Advice SFTR Challenges

How can firms become compliant with SFTR ahead of its SFTR experts at REGIS-TR discuss the potential
implementation date, which is just under a year away. Fabien headaches around the regulation’s workload
Romero of IHS Markit and Simon Davies of Pirum explain
page 24 page 28
4 SFTR Annual 2019

SECURITIES FINANCE
NEED A FIRM FOUNDATION FOR SFTR?
ASK US ABOUT OUR EVENT-BASED, CROSS-ASSET
PLATFORM FOR SECURITIES FINANCE WITH FULL
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Contents
SFTR Landscape Regulatory Platform

DTCC’s Valentino Wotton talks about trends, trade deltaconX’s Fabian Klar explains why he left a market
repositories and the possibility of the regulation going global infrastructure facilitating reporting to provide an intermediary
service that actively supports market participants
page 32 page 36
SFTR Reporting Reporting Challenges

Jonathan Lee of Kaizen Reporting discusses how to make an Markus Büttner of Comyno explains why firms shouldn’t
honest assessment on the quality of your firm’s SFTR reporting implement SFTR with a sole view on reporting requirements
page 40 page 44
SFTR Complications Vendor Profiles

Catherine Talks of UnaVista suggests that pre-matching is Profiles from the SFTR annual’s sponsors detailing more
not the silver bullet the industry is hoping it is and may even information about the organisations and, in some cases,
create additional complications the contacts best able to assist with any questions
page 48 page 55
6 SFTR Annual 2019

SFTR solution
No gimmicks
Pirum and IHS Markit Pirum & IHS Markit’s SFTR Solution offers the
securities finance industry the expertise and flexibility
meeting your SFTR needed to meet the challenge set by SFTR. A modular,
requirement together fully hosted reporting solution that combines IHS
Markit’s pedigree in regulatory reporting and data
Securities Lending | Repo management, with Pirum’s expertise in post trade
reconciliation and automation.
Buy Sell-back | Margin Lending
For more information contact sftr@pirum.com
or call: +44 (0)20 7220 0968 (UK & Europe)
+1 917 565 8575 (US). For IHS Markit, contact
sftr@ihsmarkit.com or call +44 207 260 2301
www.pirum.com/SFTR
www.ihsmarkit.com/SFTR
Richard Colvill
SFTR Analyst
ISLA
Industry Collaboration
In the driver’s seat

Richard Colvill of ISLA discusses how the association
is helping the industry prepare for SFTR and how its
steering committee shapes the future of securities lending
Maddie Saghir reports to ESMA is derived from many hours of forensic analysis
and debate by steering committee and associated working
How are the ISLA working groups helping groups; assembled to tackle the many identified issues.
industry participants prepare for SFTR? While considered informal, ISLA was fortunate enough to
present its findings to the senior policy officer at ESMA in
The International Securities Lending Association (ISLA) a dedicated forum hosted by one of our member firms.
has appointed a dedicated project team to tackle the During this consultation, we were able to articulate our
many issues related to this European shadow banking findings, and in many cases, provide carefully constructed
legislation. The team is four-strong and works exclusively arguments in the case of no alternatives should our
on this topic, with the simple objective to help deliver proposed solutions not be granted.
‘best-practice’ to the industry. ISLA acts as a conduit to
the regulators and, working with the industry, provides Are the ISLA working groups well attended
feedback to the European Securities and Markets and what insight can be gained from them?
Association (ESMA), challenging many of the finer
points within the regulatory technical standards and The steering committee acts as our executive board,
implementation of the technical standards. The feedback deliberating on all issues raised in this forum and in
Industry Collaboration
all other working groups. Its 16 members’ companies leaders and subject matter experts who seem very
were chosen to ensure a diverse participation and happy to collaborate, recognising that it is in their best
representation from all demographics within the interests if there is agreement on best-practice.
industry. Meeting every two weeks and for up to four
hours at a time, the steering committee is well placed There are two dynamics in the Vendor WG, those
to analyse a lot of content and drive solutions. With ISLA companies who manage trading platforms and have an
chairing and the members acting as stakeholders and a obligation to their existing clients, and those who are
democracy, this group is well placed to debate and vote seeking a commercial advantage by selling solutions
on all contentious issues and propose the best direction in this space. These participants are playing together
of travel for the entire industry. This year, ISLA has nicely and are sharing knowledge without encumbrance,
opened up telephone participation to all ISLA members seemingly comfortable to be transparent.
so that this meeting is not exclusively for this group. We
continue to welcome anyone who wishes to dial-in. What do you anticipate the biggest
challenges will be in the first few months
In addition to the steering committee we also host three of SFTR go live?
dedicated working groups for vendors, tri-party collateral
providers and trade associations to resolve numerous We have seen in previous legislation, for example the
topic specific issues. These meetings are held monthly European Market Infrastructure Regulation, that the
and often raise issues that require escalation to the matching rates are initially quite low. Many agent lenders
steering committee. The Trade Association WG is will not have a reporting obligation to the regulators until
a forum that ISLA chairs, bringing together over 10 the 11 October 2020, being a phase three entrant, but
associations globally. It provides a platform to share they will have to provide data to their borrowers who go-
knowledge with the industry in a collaborative way and live on the 11 April 2020.
to ensure a common approach to implementation. We
happily distribute all of our project documentation with The backloading process will be a challenge due
these associations, so they too can disseminate them to to the matching requirements, where applicable.
their membership. Participants are advised to ensure that they conduct a
suitable pre-matching process or contract comparison
Examples of this include our findings supporting issuer prior to reporting, to ensure a higher success rate at
legal entity identifier (LEI) gap analysis, agent lender data the trade repository.
provision, counterparty and participant LEI construction
logic, corporate actions analysis. Alongside our friends Do you think SFTR will provide the industry
at the International Capital Markets Association, we drive with opportunities in the longer term?
innovation in this space and lead by pushing content.
This reporting obligation is a good initiative as it provides
How well is the industry collaborating in participants with the opportunity to take a long, hard
preparation for SFTR? look at their booking practices and controls. It provides
the perfect opportunity to clean-up their data and pre/
We’ve seen a rise in interest since passing the 12-month post-trade processes, leading to higher straight-through
marker, prior to entry-into-force of the Securities processing rates and settlement efficiencies.
Financing Transactions Regulation (SFTR), with many
of the outliers now seemingly more focused. Most of The unparalleled transparency that SFTR will provide to
the tier-1 banks and larger industry participants who are the regulators will strengthen our product and remove
well resourced, have been taking an active role in their the doubts surrounding our industry, which have led to
analysis since early 2018. They are well prepared, with this legislation being proposed after the crisis in 2007.
many sitting on the board of the steering committee. So the spotlight being shone on shadow-banking is not
Many of these board members are industry thought- a bad thing. SLT
10 SFTR Annual 2019

Global Securities Finance and
Collateral Management Solutions
Optimize funding and collateral decisions

Reduce counterparty and operational risks
Enable eﬃcient and high-growth operations
Meet regulatory and market requirements
Communications
Technology
Data and Analytics
broadridge.com
© 2018 Broadridge Financial Solutions, Inc., Broadridge and the Broadridge logo are
registered trademarks of Broadridge Financial Solutions, Inc.
SFTR Outlook
Jonathan Adams
Managing principal
Delta Capita
12 SFTR Annual 2019

SFTR Outlook
A price to pay for change and progress

Jonathan Adams of Delta Capita questions whether SFTR
will ultimately deliver more efficiency and transparency to
the securities finance market
When the first Securities Financing Transactions their role in the securities finance ‘food chain’. And so, a
Regulation regulatory technical standard (RTS) was journey of discovery was embarked upon.
released to market participants for consultation, it was
met with dubious distain. Of the 153 fields, few could The fallout is significant. Within seemingly identical
imagine how it would be possible to report more than 30 businesses, firms’ varying approaches to lifecycle
fields. Settlement matching had been on dates, security event processing will be a showstopper in a transaction
identifiers, counterparty information and economic terms. reporting context.
The reporting complexity for the securities finance Even when two firms employ the same technology
industry is set to trump other transaction reporting vendor solution, there is sufficient flexibility to approach
regimes despite the fact that those already live regimes lifecycle events differently. For example, one firm may
had suffered poor matching statistics, resulting in treat a lifecycle event as an amendment to a transaction
multiple participants being burdened with significant (retaining the original trade identifier) whereas another
remediation programmes. may close the transaction and create a new transaction
(creating a new trade identifier). In a reporting context,
From a processing perspective, a stock loan with the trades that matched on day one will no longer match
participation of multiple principals, currently treated as after a lifecycle event.
a single transaction, will have to be treated as multiple
transactions with each of those principal’s participation Solving for this challenge requires an industry-wide
to the trade treated as individual transactions with consistent approach.
separate trade identifiers. This essentially mandates
point-of-trade disclosure. This will disrupt the existing Today’s world
post-trade Agent Lender Disclosure of Principal (ALDOP)
regime with its deadline of one day after settlement. The roles of the types of institution in the securities
finance ‘food chain’ to a large extent have remained
It begs the question, how can a reporting regime of this unchanged irrespective of jurisdiction. The bulk of
complexity, fraught with the risk of matching failure, serve the supply is provided by the beneficial owners many
the regulator in determining the potential for systemic of which lend via their global custodian. There are
failure? Moreover, how can it benefit market participants? significant exceptions, some beneficial owners with their
own lending programmes and some beneficial owners
The penny drops participating in third-party lending programmes, either
via another custodian lender or via a dedicating third-
With the finalisation of the RTS market participants in party lending provider. Whether directly or via a lending
discussion with the industry’s trade associations, vendors programme, stock is lent to broker dealers and prime
and consultancies quickly came to the realisation that the brokers. Prime brokers on-lend to hedge funds. Lending
immense challenges were not going to be solved by the platforms and other intermediaries (voice broking still
individual efforts of firms working in isolation; it would exists) serve the prime brokers and broker dealers; there
require the collaboration of all participants irrespective of is no disintermediation.
SFTR Outlook
There are two reasons why this is the case. Credit However, bilateral over-the-counter (OTC) activity,
disintermediation by prime brokers serves to protect such as securities lending, remains largely unchanged
the beneficial owners. Secondly, it has usually not despite the availability of lending platforms and
made economic sense for beneficial owners to invest clearing solutions. The technology that supports the
in the technology and expertise required to run their industry has evolved to support new products and
own programmes. Income from securities lending is new jurisdictions, but industry participants adopt the
still considered as discretionary, non-core and more changes with varying levels of sophistication. Over
effective when pooled in custodian lending programmes time, each firm has addressed the evolutionary changes
with flexible product and collateral options. individually, hence a variety of approaches to solve for
the same change.
Prior to the financial crisis of 2008, the function of a
highly effective settlement was a source of competitive To sum up, despite the emergence of trading platforms
advantage over a less efficient counterparty. For the bilateral securities finance ‘food chain’, business
example, knowing that there was a good chance that a process and technology have remained largely
counterparty would fail to deliver provided the borrower unchanged for decades and the absence of industry-
with the use of the cash collateral, punitive charges for wide standardisation has held back the uptake,
failing and the arrangement of a temporary borrow. development and investment in the next generation
technology and cost reducing innovation. Until the
SFTR regulation, with competition for resources, cost
controls and the burden of other regulation, industry
participants have had to focus on ‘keeping the lights
on’. Where firms have invested in newer enterprise
technology, implementations have sometimes been
The unintended lengthy and costly, making it difficult to realise the
cost benefits of the investment, reducing the incentive
consequence of for other firms to invest in wholesale change, giving
SFTR is that the tactical improvements to the front office experience.
industry has no Unintended—but highly desirable—

option but consequences of SFTR?
to improve
The unintended consequence of SFTR insistence
data quality on so much more data being matched is that the
industry has no option but to improve data quality and
adopt a far greater level of standardisation through
industry collaboration.
However, the overall impact was chaotic with
settlement bottlenecks impacting heavily on market SFTR indirectly forces the digitisation of data that in some
liquidity, so eventually tools such as contract cases remains undigitised (for example, legal agreements)
comparison became available to reduce settlement and elimination of manual task and processes. It also
failures. It reinforced that the direction of travel for forces the standardisation of data in order for it to match at
the securities finance market (as with markets in the trade repository. Therefore, every element of transaction
general) had to be innovation to reduce friction. This data has to be available digitally.
had been achieved where markets are on-exchange
and clear via central counterparties because clearing More generally, even when budgets and resources
processes require process standardisation driven by are constrained, it forces investment in streamlining
the central counterparty. industry processes.
14 SFTR Annual 2019

SFTR Outlook
Unlike other traded products represented by a single of all elements of the data and resulting improved data
trade association, the securities finance industry is quality will smooth the path for greater innovation,
served by multiple trade associations—the International automation and cost reduction and precipitate fresh
Securities Lending Association, the European Repo and approaches to a business that in places has come
Collateral Council and the Association for Financial dangerously close to being unprofitable.
Markets in Europe, not forgetting the Risk Management
Association, Pan Asia Securities Lending Association, Call to action
South African Securities Lending Association and
Canadian Securities Lending Association. In solving for It appears, that however positive, there is always a price
the common challenges that have emerged as a result of to pay for change and progress. The securities finance
SFTR regulation, these associations have consulted one industry has traditionally been a very relationship-based
another and collaborated. industry and its eventual streamlining will diminish that
benefit. Moreover, it will change the business model
It has precipitated the emergence of the first securities for the supply side of the business and transparency
finance industry consortium where banks have will cause some beneficial owners to lend securities in
collaborated to agree approaches to common issues jurisdictions that have not yet been impacted by SFTR or
and an industry-wide SFTR test strategy, with test packs retreat altogether.
and expected results.
Perhaps a little late for the SFTR compliance deadline,

the industry (at the association level) is collectively
investigating a common domain model for securities
finance. This will form the foundations of next-
generation technology, eventually setting the course
for the adoption of distributed ledger technology. It will The industry is
reduce the time, cost and risk of developing, integrating on a journey to
and implementing new technology, paving the way for
rapid innovation.
solve challenges
collectively
The industry is on a journey to solve challenges
collectively, collaborating on common complex
process challenges to reduce cost (individually and
collectively), which will improve efficiency of the
marketplace overall.
This journey will over time disrupt the securities finance

ecosystem enabling sophisticated beneficial owners to The industry as a whole needs to develop metrics on
lend low margined supply directly to large end-user firms. the impact to asset liquidity if certain types of beneficial
Prime brokers will perform a facilitation or agency role, withdraw from lending. More generally, firms that operate
disintermediating themselves from a credit perspective, pooled lending programmes will need to develop strategies
reducing expensive balance sheet usage. The industry and infrastructure to re-incentivise beneficial owners to
landscape will change and may bring greater success to participate in lending. Those firms that are essentially
emerging platforms and trading venues. conduits for end users will also need to develop strategies
to deliver and capture business value in the medium to
While the SFTR regulation may appear to be a business long term ecosystem. After all, infrastructure plumbing
burden, it will be the catalyst for change across the services may prove to be temporary if distributed ledger
securities finance industry as whole. The full digitisation technology is the direction of travel.
Getting ahead of SFTR with Trax
and EquiLend
Sunil Daswani of Trax discusses how its platform can help
to mitigate the regulatory risk exposure arising from SFTR
Risk Exposure
The Securities Financing Transactions Regulation EquiLend’s own SFTR Working Group, which provides a
(SFTR), the most significant and ambitious regulation in forum for over 25 organisations.
the securities financing market, comes into effect on 11
April 2020. This helps to ensure challenges are tackled and ironed
out by the industry itself, or by reverting collectively to
Based on industry experience of other reporting the European Securities and Markets Authority (ESMA),
regulations, such as the derivatives-focused European which has been responsive.
Market Infrastructure Regulation (EMIR), we know that
the firms that have to comply with SFTR reporting will Nevertheless, getting reporting wrong could be
need to get a head start on user acceptance testing expensive and harmful to market confidence. The UK’s
(UAT) if they wish to report their transactions in an Financial Conduct Authority (FCA) has made it clear that
accurate, complete and timely manner. fines or penalties will be imposed for non-compliance of
reporting. Non-compliance encompasses over reporting
The regulation will create greater transparency, of transactions, mis-reporting of transactions, under
which can be seen as a major positive for both reporting of transactions, late reporting of transactions
participants and regulators of this multi-billion and incorrect reporting of transactions. Given the
dollar industry. European regulators are addressing securities finance industry estimates there may be
the uncertainty and lack of transparency across the in excess of 100 million transactions per day, which
financial markets that came to the fore during the indicates the scale of reporting that will be required, with
2008 global financial crisis. up to 155 fields of data per transaction.
Market participants have risen to the challenge by Pre-matching of trades has not been a regulatory
coming together to deal with the regulatory requirements requirement and whilst it is still not required by
via the industry associations: International Securities regulators, with SFTR and the Central Securities
Lending Association (ISLA), International Capital Depositories Regulation (CSDR) imminent, this may
Markets Association (ICMA), FIX & the Association for result in a situation where regulatory transaction
Financial Markets in Europe (AFME), and also via Trax & reporting or failed trades is more serious and has a
Risk Exposure
negative financial consequence, given that the industry and to ensure greater flexibility for clients who may
has not benefited from pre-matching. Trax and EquiLend select the trade repository/repositories of their choice.
have been in talks with their clients about the potential Detailed below is a summary of what can currently be
benefits from the use of Trax Match Repo and EquiLend’s tested as of June 2019, with additional features set to
Unified Comparison. Unsurprisingly, some clients who be added soon:
have not looked to pre-match their trades in the past are • UTI generation and sharing
considering these options now. • Straight through processing flow end-to-end
• Eligibility, enrichment and validation of
On the front foot • transaction data
• Monitoring of report statuses via Trax Insight
Mindful of their clients’ risk exposure, Trax and EquiLend • Preparation of reports to trade repositories
have accelerated the build of our SFTR solution, and are • Testing report outputs from trade repositories
currently offering free UAT to clients and prospects, a • Participation in the industry wide UAT testing on
year out from go-live day. The offering benefits from our platforms
seamless connectivity from front-to-back, starting
with trading—be it on-venue or bilateral through to a When EMIR was introduced, the majority of issues that
reporting dashboard. clients faced may have been avoided had firms made an
early commitment to UAT.
Eight key steps for the SFTR solution:
1. Unique transaction identifier (UTI) generation Lack of preparation and testing resulted in a dearth of
at point of trade via next generation trading or clarity regarding the process for generation and sharing
post-execution of UTIs. In addition, inconsistencies in the inter-trade
2. Display, management and reporting of loan sub repository reconciliation process were for the large part
allocations from end-to-end not identified until after ‘go live’. The combination of
3. Access to the UTI portal, a centralised location potential system problems and the discovery of possible
where clients can generate or share UTIs with their missing static data needed to populate fields had not
counterparties been spotted prior to going live, creating a backlog of
4. The UTI Portal also allows clients to give access to issues for some organisations. Trax and EquiLend are
their counterparties without the need for them to working to support clients in addressing these issues
contract with us earlier in the process. Through early testing, gaps can
5. Data validation and enrichment throughout the be identified and issues resolved, helping to mitigate the
life cycle of the trade or transaction, delegated regulatory risk exposure arising from SFTR.
reporting and a full status dashboard to manage
exceptions
6. The ability for agent lenders to provide a customised
view of the Trax Insight dashboard to their clients
with view options set by the agent lenders
7. Full visibility and traceability of the entire reporting
process before and after reporting transactions to
SFTR product management
the trade repositories

8. Our solution covers all the complexities of
securities lending, repo and margin financing given
our expertise and strength of all three products
Sunil Daswani
across our two organisations
Trax and EquiLend have made a point of working closely

Trax
with approved trade repositories to build connectivity,
18 SFTR Annual 2019

COMPLIANCE
IS A BEAST.
We help you tame it.
deltaconx.com
Hertensteinstrasse 51
CH-6004 Luzern / Switzerland
EMIR REMIT MAR FinfraG MiFIR / MiFID II SFTR

SFTR: the red pill or the blue pill?
Martin Walker of Broadridge discusses how firms should
open their eyes to the consequences of failing to adequately
prepare for SFTR implementation
“You take the blue pill—the story ends, you wake up in your bed and believe whatever you
want to believe. You take the red pill—you stay in Wonderland, and I show you how deep the
rabbit hole goes.”
The Matrix
In the film ‘The Matrix’ taking the blue pill would have uncomfortable truths now to avoid a great deal of pain
returned the hero Neo to the state of blissful ignorance in the future.
of reality that most humans lived in. Taking the red pill
revealed the true reality of the world. When it comes to Market participants face huge challenges around
the Securities Finance Transaction Regulation (SFTR), it SFTR compliance. Many firms are still in the nascent
is very comforting to believe you can simply take the blue stages of defining how their target operating
pill by trusting that a series of steering group meetings, model will look. Some are simply making blue pill
the right infrastructure and drawing a collection of vaguely assumptions. Others have been so distracted by the
defined boxes with arrows between them is enough to second Markets in Financial Instruments Directive
comply. The trouble with simply taking the blue pill is (MiFID II) and preparations for Brexit that they have
that eventually you will face the consequences; spiralling not had time to make key decisions around data,
costs, disrupted business focus and, potentially, fines process, technical and organisational models. Then
for failing to meet the reporting requirements. Though there has been the on-going dialogue between the
the deadline for SFTR compliance is fast approaching, industry and regulators to drive out ambiguity in the
there is still time to take the red pill and face up to some regulations. While the temptation is simply to plunge
SFTR Wonderland
in and do things because of the shrinking timeline for What should the roles and responsibilities look like
implementation and testing, it is critical that the big for relevant functions? Roles and responsibilities
questions are properly aired in your organisation. need to be clearly defined to avoid confusion where
some work is duplicated, and other work may have
The big questions been completely missed. No firm, particularly those in
the securities finance business, can afford the costs
Where is the data going to come from? Much of the data that would occur from lack of ownership of problems or
simply does not reside in existing core trade processing unclear escalation paths.
systems. Data point gap identification can highlight
where required data is missing and a plan put in place for How are you going to use data to manage and
sourcing it. Firms must give further thought to how they change the processes? Everyone in capital markets
will enrich data and what elements of data enrichment seems to be talking about data these days. However,
will take place through third party solutions. If your firm the data in many firms and functions is incredibly
has been making assumptions about where data points poor quality.
would come from (whether from internal or external
sources), now is the time to stop and work through each An effective data-driven process for management, control
data point to get definitive answers. and change requires up-front thinking as part of operating
model design. Do you really want to repeat the mistakes
What exception management flows (including of so many other major changes? Many people will be
counterparty interaction) need to be designed? familiar with the experience; operational and regulatory
Following go-live, ops teams will spend a lot of time and teams are initially overwhelmed and management
effort identifying and resolving breaks and mismatches. demand data and metrics about the extent of the
Setting out a clear process for exception management problem. Data that comes from the very same teams that
and how ops teams will interact with counterparties are sinking under work. It is hardly the basis for generating
to resolve discrepancies in advance will lessen the high quality data and making good decisions.
operational strain immediately after go-live.
Designing clear and accurate reporting of process
How should processes and teams supporting SFTR metrics will enable managers to measure the volume
interact with existing securities finance processes? of work and efficiency of processes. It can also identify
A great many of the breaks and exceptions that will be where to focus efforts to deal with the root causes of
identified by trade repository reconciliations or ‘pre- problems and where to invest in process improvement
matching’ prior to reporting will also appear as exceptions in the future.
in existing processes related to contract compare or
trade/settlement instruction matching. There is also a Is your current plan genuinely joined up? Finally, there is
clear overlap between SFTR and the European Market a fundamental need for all firms to look at their model, in
Infrastructure Regulation (EMIR) related business terms of both infrastructure and business process and ask
processes for the management of unidentified transaction if it is genuinely joined up. Many of the obvious gaps at
identifiers (UTIs) and legal entity identifiers (LEIs). These both the firm and the industry levels involve the exchange
types of problems do not just create costs in the reference of UTIs. Do you hope pre-matching will ensure you always
data or regulatory reporting teams. When there is a break have the same UTI as your counterparty? Well what if
due to LEI or UTI issues, the query can bounce around the your counterparty is using a different reporting service?
organisation, including the front and middle office until a What would happen if, despite the best intentions of the
conclusion is reached about what are simple questions. ‘waterfall’, counterparties generate (or do not generate)
Who have we traded with and which trade are we all UTIs as agreed. Do you have smaller counterparties you
talking about? These breaks, which can persist for days in trade with less frequently? Then there will inevitably be
some scenarios are a major source of operational risk and some need for manual exchange of UTIs. Do you know who
potentially, regulatory fines in future. will do this and how?
SFTR Wonderland
More than just boxes for SFTR that reduce the cost of compliance and
operational risk
Based on our experience, the high-level view of an SFTR • Project management, business analysis and
operating model should look like the diagram above: testing support to augment firms’ internal project
teams to help firms get over the line with SFTR and
However, effective targeting operating model design is hit reporting deadlines
more than just a collection of boxes on a PowerPoint. • A long-term strategic approach to operating model
It needs to capture a picture of current reality, clearly definition that will position your firm for future
articulate the needs the operating model has to fulfil phases of the reporting mandate and facilitate
and provide real solutions. To turn the target state into further automation of the securities finance process
a practical reality requires significant effort. Generally, Broadridge’s SFTR consulting service leverages our
implementation is harder work than creating the blueprint, deep knowledge of the securities finance business,
but without the initial design it is unlikely the new model lessons learned from EMIR and MIFID trade reporting
will work effectively. Ideally those designing the operating and the expertise of staff who have managed large-scale
model are people who have had practical (and successful) transformation projects in banks.
experience of implementing change and are available to
help as you move from design to implementation.
Broadridge can help

Head of product management
Broadridge is helping existing clients and other market

participants to cut through the complexity of SFTR and
create a long-term vision for their SFTR operating model.
This provides a practical blueprint for front-to-back changes
Broadridge SFCM
to overall architecture, organisational structure, business

Martin Walker
processes and where appropriate, location strategy.
Broadridge’s SFTR consulting service offers:

• Consultancy to define target operating models
22 SFTR Annual 2019

CHOOSING THE
RIGHT SFTR TRADE 90% 80%
REPOSITORY 90% of top 20 80% of top 20

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SFTR: less than a year to go
How can firms become compliant with SFTR ahead of its
implementation date, which is just under a year away. Fabien
Romero of IHS Markit and Simon Davies of Pirum explain
With Securities Financing Transactions Regulation (SFTR) their efforts, particularly around how they are going to
due to go live in its first phase on 13 April 2020 there is adapt their operating model in order to maximise the
now under one year for many firms to be compliant. pairing and matching rates at go-live.
Following the ratification of the SFTR regulatory technical Is the industry ready?
standards (RTS) by the EU parliament on 22 March
2019, the European Securities and Markets Authority No, not yet! I don’t think anyone would be surprised
(ESMA) has published its much awaited consultation on by that.
proposed level three guidance. Firms now have until 29
July 2019 to submit contributions under the consultation Firstly, firms are working though some complicated
timeline, then there will be a period where the finalised issues at an industry level, adopting the emerging
guidance notes will be used to clarify some of the industry best practices, along with dealing with these
outstanding points the industry is waiting for. changes at a reporting level, firms are having to adapt
how they process transactions and the resulting life-
Since the regulation was ratified, Pirum and our SFTR cycle events.
partners, IHS Markit, have seen an increase in activity
from firms preparing for SFTR compliance, as well Secondly, we need to wait until the level 3 regulatory
as new clients signing up for our regulatory reporting guidance has been completed. Specifically, market
services. Furthermore, existing clients are ramping up participants are looking for further clarity on how to report a
24 SFTR Annual 2019

Compliance Advice
number of scenarios. Following this period of consultancy that the industry faces, there could be changes once the
we are likely to see guidelines published in Q4 2019. final guidance notes are published. Although that gives
very little time to deal with those changes when it comes
Thirdly, there is no requirement to report yet, and there to meeting the initial phase one go-live date.
are no authorised trade repositories (TRs) yet to send
reports to. Rightly, the industry is taking full advantage There is no time for complacency given some of the
of the timeline afforded to them by the regulators to reporting complexities. There is a need for both data
prepare for the go-live date. and process remediation prior to go-live along with
the introduction of new industry practices (particularly
Importantly, we’ve seen firms engage across their around agency lending disclosure (ALD) and collateral
business units and regulatory reporting teams to reporting treatments). A lot of work needs to be
work on their solution designs and through our design completed before firms are ready to start reporting.
partnership group (DPG) we’ve seen an impressive level
of engagement to deal with the challenges the regulation Are you ready?
creates. The industry has learnt from issues in the past,
and whilst firms are not fully compliant, we’ve seen an For those firms still in their solution design and vendor
increase in their activity in preparing for the regulation selection phases, now that the EU parliament has ratified
since the ratification of the RTS took place. the RTS, there is no time to waste in galvanising focus and
ensuring there is necessary support internally to start or
The consultation period seeks to deal with some of the accelerate your project. You should also consider what
outstanding issues the industry is waiting for clarification data and process remediation is required. As part of our
on, however it has thrown out a few further questions. SFTR design partnership group (DPG) we have taken the
At the same time some of the more significant topics time and effort to listen to what our clients need and
covered include: working out how we can support them in their reporting
• Backloading: how to approach the backloading solution. Around 830 hours have been spent by the DPG
requirement at reporting start date, including a reviewing requirements and discussing how best to
discussion on the pros and cons of reporting all achieve these—along with the many hours invested by the
open trades on day one industry bodies in defining best practices. Naturally, this
• Reverse stock borrow loan: should ‘cash-driven’ has taken time, as firms grapple with the requirements
securities loans be reported using the repo and gain a broader, more detailed understanding of what
reporting template they need. This hasn’t delayed anything and has added
• Effective date: should modifications be reported enormous value to both our delivery programme and our
once they ‘have taken place’ as opposed to when clients. Between Pirum and IHS Markit, we’ve dedicated
they are initially agreed? over 30 resources to our joint programme over the last
• Collateral re-use and reinvestment: where a non- two years and we’re now in the late phases of our project.
financial counterparty (NFC) receives mandatory Most importantly, we remain on track and continue to
delegated reporting from more than one financial progress well including client integration and testing.
counterparty (FC) should each FC submit a separate
reuse/reinvestment report on behalf of the NFC. What this means in practice is that we have firms on-
Does the same apply to voluntary delegation? boarding and integrating file feeds to our service well
• Non-financial counterparties: should an EU ahead of the go-live date for reporting, and ahead of our
domiciled NFC fulfil their own reporting if the FC is pre-production testing planned to start in Q3 of this year.
non-EU domiciled
We actively share and review our progress and pipeline
Running at 178 pages and 85 questions, there is a lot to with the DPG and our clients, as part of our ongoing
consider, and while the paper gives an indication on how communication with the market. We now have 48 firms
ESMA are thinking about dealing with some of the issues committed to using our solution representing the broad
Compliance Advice
range of securities finance market participants. Within this by the TR with associated trade status. This modular,
group we have agent and principal lenders, prime brokers, fully hosted, solution leverages our proven track record of
broker dealers, asset managers and funds all represented. delivering industry wide reporting solutions and our years
In terms of product representation this group covers of partnership with the securities lending community.
securities lending, commodities lending, repo, buy-sell The service is composed of the following modules,
back and margin lending, so we’ve been able to design our providing an end to end solution for all in scope SFTs:
solution for every combination of participant and product. • Data exchange: leveraging IHS Markit and Pirum’s
extensive connectivity to collect all the underlying
Helping you to be ready information required for SFTR reporting
• Data warehouse: full history and audit trail of
With such demanding requirements, how can IHS all received transactions retained for more than
Markit and Pirum help firms to be compliant with their seven years and data enrichment using centralised
SFTR reporting? reference data
• Data reconciliation: reconciliation of all transactions
Firms can leverage their existing experience and to the SFTR required standard with UTI generation
connectivity to both IHS Markit and Pirum in the Securities and management
Finance and regulatory reporting spaces, alleviating • Reporting: creation of ISO 20022 reporting
some of the effort required for SFTR compliance. messages and management of all reports to a TR
of the client’s choice
IHS Markit already has internationally recognised • Delegated reporting: management of delegated
expertise in data management and provides trade reporting including access for underlying
reporting services for the reporting regimes of clients to view and affirm the reports made on
the following regulators: Australian Securities and their behalf
Investments Commission (ASIC), Hong Kong Monetary
Authority (HKMA), Japan Financial Services Agency Key benefits:
(JFSA), Monetary Authority of Singapore (MAS), OTC • Built-in infrastructure and relationships: tap into
Derivatives Regulators Forum (ODRF), US Commodity the existing relationships that IHS Markit and Pirum
Futures Trading Commission (CFTC) and in the EU under have built across the securities finance industry.
European Market Infrastructure Regulation (EMIR). Our network of data contributors, built over the
last 20 years, represents $15 trillion of inventory
Additionally, clients can take advantage of Pirum’s held by over 120,000 underlying funds. We process
decades long expertise in securities finance lifecycle and match over 3 million transactions daily using
management and automation, delivered through its a reporting specification that already covers the
award-winning contract compare solution, helping majority of fields required by the latest draft of the
address many of the challenges of the SFTR dual SFTR legislation.
sided reporting and unique transaction identifier (UTI) • Flexibility: use the solution’s modular nature to
generation and dissemination. meet your individual needs and structure. Flexibility
starts with the data ingest architecture all the way
The result of this interoperable and seamless down to trade reporting as the solution will be
combination delivered by two of the Securities Finance connected to every TR.
market leaders, is a reporting solution for Securities • Future-proof compliance: get a solution that has
Financing Transactions Regulations (SFTR) that sets the flexibility to deliver transaction reporting across
an industry wide standard. Providing the foundation future legislation, which might require transaction
needed to reconcile trading and collateral activity down reporting in other jurisdictions, as well as any
to the necessary UTI and legal entity identifier level of additional transparency/risk reporting framework
granularity. The SFTR solution offers participants turnkey that could be mandated across the securities
connectivity to trade repositories, the reports produced finance industry.
26 SFTR Annual 2019

Are you ready to
report for SFTR ?
NEW TRAINING COURSES
Introduction Overview Reporting basics Transaction

Course materials What is SFTR? Product knowledge reporting
Course format The 3 pillars What to report, Format
Objectives Why the need? when and to whom ? Trade/ Position level
State of play Who should report ? UTI generation
Reporting triggers
and non-triggers.
Quiz
Reports & Action Field by field Reporting Relationship

Types analysis of ESMA’s examples with TR
4 Tables validation file Repo: Bilateral & TRs’ obligations
6 Reports Table 1 chain inc CCP/BSB SFT validation
10 Action Types Table 2 early termination/ SFT reconciliation
SL quantity change/
Reports vs Action Table 3 Collateral change
Response to client
Types Table 4 reuse/Margin update
This course is provided by Market FinReg.
A fantastic communicator, with a huge New September dates

huge knowledge of EU legislation..... Madrid 9 September 2019
It really answered lots of the questions
Luxembourg 11 September 2019
I had regarding SFTR..... So many issues
Frankfurt 12 September 2019
about SFTR fell into place..... This SFTR
training course covered every aspect from London 16 September 2019
‘Why SFTR?’ to the individual fields..... Online Always
www.regis-tr.com
commercial@regis-tr.com
Things that make you go owwww
SFTR experts at REGIS-TR discuss some of the less obvious
pitfalls in the run up to SFTR
Many aspects of the Securities Financing Transaction constantly updating any SFT with the slightest likelihood
Regulation (SFTR) workload have been obvious from of still being live on 8 October 2020. You then have until
the start. Others—less obvious, possibly trickier—may 18 October—a Sunday—to submit them to your TR. Bear
only emerge as you go along. Some of these lurking in mind, however, that the execution timestamps on
banana skins are coming up in industry working groups those trades might still have to be within one hour of
and in our discussions with our in-house experts, notably the stamps on the other legs. And what about the other
Clearstream product delivery guru Neil Davies. In no reconcilable fields? Also, 12 October is the first reporting
particular order—and most will hopefully be resolved date for funds. Your first dual-sided reporting with fund
before reporting starts—these are a handful of the counterparty newbies comes bang in the middle of
potential headaches. the unique trade identifier (UTI)-riddled runup to your
backloading deadline.
Backloading
There’s another potential issue here, too. Net exposure
Backloading, as of course, you know, is the requirement managed collateral updates and reuse are reported daily
to report outstanding SFTs traded before going live. If to the TR. Fine, except what happens if some of the
you go with level 2 approach, you don’t report your the trades to which the collateral is allocated are waiting to
open-ended transactions on the first day, but hang on to be backloaded? They’ll be invisible. Same goes for reuse
them until 180 days after your start date. From that point, data reporting.
you have a maximum of ten days to submit the ones that
are still open. UTI sharing
So far, so—relatively—straightforward. If you’re a bank or The UTI issue is sticky anyway, but once it’s decided
investment firm in the first wave of reporting, this means which counterparty creates it, how do they communicate
28 SFTR Annual 2019

SFTR Challenges
it to the other one? All the main vendor solutions can 2021—reporting go-live for non-financial counterparties
generate a UTI—great if both parties use the same (NFCs) and backloading for central securities
vendor, but not if they don’t. There needs to be some depositories (CSDs) and central counterparties (CCPs).
quick, efficient and inexpensive system to deal with On top of this, the number of reconcilable fields will be
this—a market utility?—and so far, there isn’t one. increased periodically until January 2023.
Agent lender data sharing Phasing makes sense for many reasons, but it means
that nothing will be quite stable for the first two years,
The US Risk Management Association has said with counterparties all at different stages and everyone
something rather interesting about agent lending and dealing with across-the-board changes at the same time.
unintended consequences. If an agent lender brokers
a trade between, say, a borrower in the scope of SFTR Reuse data reporting
and an out-of-scope beneficial owner—or vice-versa—the
in-scope party must rely on that agent lender for most Even if you’re delegating all your main trade and
of its reporting data. Fine, and they are preparing SFTR collateral reporting, keep an eye out where reuse data
solutions for this, but it’s a huge obligation, especially reporting is concerned. You will need to provide an
for those outside the EU. If agent lenders are not fully overview of all your SFT-based collateral reuse activity—
geared up for SFTR reporting needs, could there be a even from across product lines—and this is very hard
migration away from the EU? for someone else to do for you. It looks like most
institutions will need to do their own reuse reporting.
What time is it?
The ISO XML
This might sound too obvious to even mention, but we’ve
heard that one of the biggest issues with transaction XML is a language with strict syntactical rules, and
reporting has been people not figuring out the correct considerably more complex than CSV. Reporting firms
times, and possibly even the days. Think execution that do not have staff already skilled in XML will need
timestamps, reporting in UTC, the international dateline, to set up training, and/or hire experienced analysts and
different bank holidays. programmers, and get third-party software tools for
conversion, analysis and testing (the ISO 20022 website
Morphing regulation is the best starting point).
The European Securities and Markets Authority’s Booking model

(ESMA) Level 3s—guidelines and new validation rules—
were published at the end of May, with a two-month For dual-sided reporting, both counterparties need
consultation period to follow. Watch out for the fine- to book trades and lifecycle events the same way to
tuning; the final clarifications aren’t due till Q4 and avoid reconciliation breaks. Corporate actions could
could have a very material impact on what is being built be a minefield—many institutions will be using different
currently. The whole industry could feel the effect. legacy platforms to manage their SFT activity, and trade
modifications made as a result of a corporate action
Phased roll-out will simply not get matched unless the parties can
figure out some sort of workable system. On the bright
First, there is the reporting go-live programme, with side, the ESMA level 3s have gone some way towards
new groups of institution coming on board at three- clarifying the great actual-or-contractual reporting
month intervals. Backloading comes later, also at three- model debate.
month intervals, and this will mean clashes, first in
October 2020 (reporting go-live for funds/backloading In fact, Neil Davies thinks the booking model could prove
for banks and investment firms) and then in January the worst headache of the lot: “It’ll be interesting to see
SFTR Challenges
how well the industry adapts their booking and reporting will follow this with reconciliation testing in August and
models to the myriad of guidelines, best-practice papers finally the end of day reports and public data in September.
and Q&As still coming out, and whether there’ll be enough These testing facilities are open to our clients and to other
detail even in all these to cover the full complexity of the firms looking to test our solutions. Our account model is
SFT business.” highly flexible. As an example, clients that outsource
their SFT submissions through our vendor partners or
Target operating model other entities can also open an account for reporting on
their own behalf, which will give them full feedback and
There’s getting ready and then there’s the afterlife. After reporting on both their direct and their delegated SFT
going live, there’s overseeing your reporting, finding and submissions. There is also a low charge non-reporting
resolving reconciliation breaks—have you considered option offering read-only access to this data.
the differences between yours and your counterparties’
operating models?—and generally keeping up. Issues
will be how many staff, what level of knowledge do they
need, when and how to start training, what facilities
you will use for monitoring—your TR’s dashboard? your
vendor’s? Do you use the vendor’s pre-TR reconciliation?
We are working
There will be a lot of this stuff. Work out as much of it as with our partner
possible during planning and testing.
Market FinReg to
Here to help provide detailed
SFTR training
All in all, it does make sense to use a trade repository
that knows and understands the market. This applies
and insight
regardless of your reporting model; full or partial
outsourcing, via a vendor, direct reporting to the TR or
all three. REGIS-TR has unrivalled access to in-house
securities lending, repo and collateral management
expertise. Clearstream, one of our parent companies, acts Our support network, which is free of charge to
as principal in securities financing transactions and as a our clients, offers fluency in all the main European
triparty agent offering repo, securities lending, collateral languages in addition to several others. Our expert client
management services and CCP margining, while our services team has in-depth knowledge of the regulation
parent company groups include Eurex Repo and BME and our solutions, with a response time averaging
Clearing Repo. REGIS-TR is the trade repository for our three hours. We work with our clients if an issue
group entities and their clients, and for the flows from proves complex, constantly stress-test our systems
group entities offering delegated reporting services. and contact a client directly if our monitoring tools
detect an unexpected change in reporting patterns.
For clients, this has practical benefits; we understand the Our relationship managers, who can be contacted
market, the regulations—we have been involved in the directly for assistance with all aspects of our regulatory
consultation process throughout—and the implications for services, hold regular user groups throughout Europe
both firm and TR. This is reflected in our solution design to discuss current issues and regulatory developments.
and our day-to-day services. Our pre-user acceptance
testing (UAT) SFTR environment is open for firms to test REGIS-TR will continue to support the industry in the runup
their XML ISO 20022 messages against the latest ISO to SFTR. We are working with our partner Market FinReg
schemas. We plan to extend the testing availability in July to provide detailed SFTR training and insight, and details
to include account opening, data processing, intraday of our coming SFTR Webinar, implementation groups and
(same-day response messages) and web searches and other information will be made available on our website.
30 SFTR Annual 2019

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SFTR Landscape
Navigating the SFTR landscape

DTCC’s Valentino Wotton talks about trends, trade
repositories and the possibility of SFTR going global
What trends are you currently seeing in the ability to consume, validate and store vast amounts of
trade repository space? transaction data that regulators seek to monitor and
analyse for trends in trading activity and risk.
Trade repositories (TRs) are becoming an increasingly
important tool for monitoring trading activity in key They proved themselves as effective trade reporting
markets. Regulators have recognised TRs as essential solutions for over-the-counter (OTC) and exchange-traded
elements of regulatory compliance because of their derivatives contracts, so TRs are now being harnessed to
32 SFTR Annual 2019

SFTR Landscape
implement Securities Financing Transactions Regulation regulation is enacted in additional jurisdictions?And,

(SFTR), the new regulatory mandate in Europe and the UK not least, can the TR support the various potential Brexit
for securities financing transactions (SFT). For example, scenarios post-October 2019?
DTCC created the Global Trade Repository (GTR) in
2012 to help firms meet their derivatives trade-reporting DTCC’s GTR is arguably the largest and most experienced
requirements. Today, we’ve added functionality so that TR in the market today both in terms of global and the
GTR will also help users comply with SFTR. European Market Infrastructure Regulation (EMIR)
reporting. In terms of experience, we are simply the most
Beyond extending TRs’ role into a new market, the other experienced player in the global derivatives processing
notable trend is TRs with the capacity not just to collect space. In 2006, DTCC established the Trade Information
and store massive volumes of data but also to enhance Warehouse (TIW), a centralised credit derivatives utility,
the quality of that data and analyse it. TRs that offer this which services 98 percent of cleared and bilateral credit
added value can enable users to sharpen their market derivatives, valued at $10 trillion.
intelligence and reduce trading risks. Through its new
portal, GTR offers custom search capabilities along TIW set the precedent for collecting trade data in a single
with detailed statistics on things like industry and client place and served as a blueprint for the future of global
overall matching rates, the top five reasons for rejected trade reporting.
submissions and historical statistics.
In terms of size, our European repository is the largest
How has the trade repository landscape for EMIR reporting, processing more than 500 million
become more competitive? messages a month. We have 6,000 clients worldwide,
3,500 of them in Europe. We have long-standing
More TRs have come to market over the past few years, relationships with regulators and operate in seven
both in existing jurisdictions as well as in a growing jurisdictions around the world, from Europe to North
number of new jurisdictions as regulatory mandates for America to the Asia Pacific region.
OTC derivatives expand across the globe. We expect the
same geographic expansion will occur with SFTR. SFT What are the main challenges of SFTR? And
reporting is a G20/Financial Stability Board requirement how does it differ from EMIR and MiFID II?
in which EU and UK regulators are first movers with
SFTR but regulators in the US and other jurisdictions will Coping with high reporting volumes and a large number
most likely adopt similar rules for securities financing of data fields will be some of the biggest challenges. Due
transactions in the coming years. to the complexities of securities financing, many firms
use manual processes in their trading and post-trade
The result is that users now have more choices for their activities. As a result, complying with SFTR will create
trade reporting. And, while TRs are highly regulated, that extreme pressure to automate these processes. For
doesn’t mean all TRs offer the same capabilities or level example, SFTR mandates 155 data fields, compared to
of experience. 129 required under EMIR for OTC derivatives. As a result,
firms should seek out TRs that can help them automate,
Firms looking to choose a TR to support their trade reporting and therefore better integrate their processes with those
compliance for derivatives and securities financing should of the repository.
vet their options carefully to identify those that can best
address today’s evolving regulatory demands. DTCC’s GTR offers a number of features that promote
automation and simplify integration with firms’
For instance, look at a particular TR’s track record—does internal processes, such as user-friendly dashboards,
it have solid relationships with clients and regulators ad hoc reporting options and data extraction for
along with proven data security? Looking forward, exception management. In the future, we plan to add
can the TR handle compliance beyond Europe if SFT scheduling functionality to create and manage bespoke
SFTR Landscape
recurrent reports. GTR also incorporates management to users to explain updates to GTR functionality
information systems that record and track accepted resulting from SFTR in mid-2018 and continue to
and rejected trade details, and analyse the status do so. We’re making it easy for existing users to
pairing and matching of reported trades. extend their service to SFTR by requiring them only
to complete a DocuSign service request to add SFTR
Additionally, firms shouldn’t minimise the complexity of to their existing contract. Those clients can continue
the regulatory reporting function they must fulfil under to use existing connectivity with GTR, or connect to
SFTR. SFTR rules are notably more detailed than us via a number of partner firms.
EMIR and MiFID II for derivatives, in part because they
address the very diverse universe of SFT products: GTR will conduct a full six months of end-to-end user
repo and reverse repo, securities and commodities acceptance testing (UAT) with clients, starting in October
lending and borrowing, sell/buy-back, buy/sell-back, 2019, and will go live as early as possible so that testing
margin lending and borrowing. And as we know from in production can start. As we have with other recent
experience, these rules will likely be revised and large initiatives, we provide a testing simulator to give
updated over time. Other challenges of this regulation firms the ability to begin identifying gaps in their data in
involve pairing and matching and effects on a firm’s advance of UAT. This launch schedule ought to convince
booking model, agreeing on the unique trade identifier firms to begin their own internal preparations as soon
(UTI) and the reuse of collateral. as possible.
How is DTCC working with clients on SFTR? If firms haven’t started implementation,
what advice would you give to them?
GTR was built through collaboration with our users
and that continues to be our approach as we adapt Don’t wait another day. April 2020 is the implementation
our infrastructure to accommodate this new trade date for the first phase of compliance and will impact
reporting mandate. As a user-owned and governed investment firms and credit institutions. That will be here
TR, which sets us apart from the competition, GTR quicker than we realise and as there is so much to do,
works with users to develop reporting solutions that you should start now.
integrate with their workflows to ensure compliance
with reporting requirements. Securities finance transactions have never been subject
to the depth and breadth of data collection and reporting
In the case of SFTR, we started user outreach in early SFTR will demand, so firms in this market will need to
2018 and continue to host SFTR industry user group enhance and test their processes for data gathering and,
forums to help highlight industry issues and facilitate in many cases, retool their workflows that currently sit at
dialogue amongst market participants. We have been the core of the securities finance markets.
engaged with both the International Capital Market
Association (ICMA) and the International Securities There has been a lot of talk about
Lending Association (ISLA) for over two years in collaboration in recent months. In what ways
preparation for SFTR, as well as prominent industry are you seeing firms collaborate for SFTR?
players, like IHS Markit and Pirum, Equilend and
Trax, for a similar period. Engaging through trade Besides our collaboration with clients, we have strong
associations and within the existing infrastructure relationships with leading vendors. GTR already has
helps us work with the market to solve big challenges. 150 vendors connected via an established partner
For example, how best to exchange UTIs, leveraging programme for derivatives reporting. We are forging
the benefit of our experience of operating under the additional strategic relationships in the securities
European Securities and Markets Authority (ESMA)’s financing space to support our mutual clients’
first systemic risk monitoring regime, EMIR, as the SFTR requirements. As of now, these announced
largest trade repository. We began reaching out partnerships include Equilend and Trax, IHS Markit and
34 SFTR Annual 2019

SFTR Landscape
Pirum, amongst many other software providers, data must report details of the conclusion, modification
aggregators and trading platforms. and termination of any SFT to a TR by no later than
T+1. The regulation includes a dual-sided reporting
With data being one of the main challenges of the obligation. Open positions need to be backloaded to a
SFTR obligations, we have partnered with Xceptor, the TR. Reports need to be paired and matched, with very
leader in data-centric intelligent automation software, to tight tolerance levels.
enable clients to leverage Xceptor’s data transformation
capabilities within GTR for SFTR. This partnership will This similarity between the regulations means that TRs’
significantly lessen firms’ operational burden by enabling existing functionality can be adapted fairly easily to
them to enrich, normalise and validate data before cover SFTR. For GTR, this fact is allowing us to focus
submitting it to a trade repository. our preparation efforts on the user community. Besides
our extensive UAT programme, we offer a GTR training
We have also partnered with Driot, the leader in certification to users and are giving them early access
real-time transactional compliance, to enable to our testing simulator.
market participants to leverage Droit’s reporting
eligibility capabilities within DTCC’s Pre-Reporting Our industry forums will continue to address
Transformation Services. As an optional service, the questions and challenges around SFTR compliance,
Droit eligibility platform allows clients to determine and our global client support team is always available
the full global cross-regulatory reporting implications to answer users’ questions.
and obligations associated with a transaction in real-
time. For every reporting decision, the Droit platform I should also note that, while it wasn’t specifically designed
will provide complete auditability and traceability to accommodate SFTR, the global portal we built for GTR
through to fully digitised regulatory text. will yield positive benefits for SFTR users. The portal
is self-service and enhances the user experience by
Firms will be able use these Pre-Reporting consolidating functionality at a single entry point. The
Transformation Services to enrich reporting with portal gives users direct, electronic access to the data
both internal and external reference data, manage stored in GTR, which means they can control the content,
exceptions leveraging native workflows, and benefit number and frequency of reports we produce.
from real-time gap analysis and testing.
How will DTCC’s GTR help users once the
Alongside cost-effective vendor connectivity and our regulation moves beyond Europe?
Pre-Reporting Transformation Services, we regularly
share insights with our partners and contribute to each We expect jurisdictions beyond Europe to enact reporting
other’s SFTR working groups. Collaboration within an requirements for securities financing transactions over
increasingly connected ecosystem is vital in delivering the next few years. Firms with global trading activity
an SFTR solution that adds real value to the end user. should keep this point in mind in choosing their TR for
SFTR reporting.
How are trade repositories preparing for SFTR?
A repository like GTR with global experience and
All TRs seeking authorisation to provide SFTR reporting operations has already weathered numerous
will have become intimately familiar with the detailed regulatory changes and has established long-
requirements of the regulation, including a number standing relationships with dozens of regulators.
of technical standards approved by the European GTR has a proven capability to adapt its functionality
Commission late last year. to accommodate the unique requirements of
different jurisdictions and also to help users build
Overall, it’s clear that, structurally, SFTR is quite flexible compliance frameworks suitable for multiple
similar to EMIR for derivatives. For instance, parties sets of rules.
Why maintain multiple solutions for
diverse compliance regulations?
deltaconX’s Fabian Klar explains why he left a market
infrastructure facilitating reporting to provide an intermediary
service that actively supports market participants
Unify your reporting processes with our in Financial Instruments Regulation/Directive (MiFIR/
deltaconX regulatory platform MiFID II), Swiss FinfraG (FMIA) and SFTR into a single
solution—deltaconX—will significantly reduce your
When the reporting component of the Securities efforts and costs to comply with multiple reporting
Financing Transactions Regulation (SFTR) comes into regimes, and allow you to refocus on your core business.
effect in 2020, market participants will face significant
additional reporting challenges. SFTR will certainly Throughout 2019, we have participated in many
be the most complex regulation in terms of reporting. conferences in which SFTR was the main topic of
Therefore, we are convinced that with our approach of conversation. We heard a lot of people talking about
unifying and automating all relevant data collection, the challenges and issues for the market to comply with
enrichment and validation processes across European this complex regulation, but only very few of the people
Market Infrastructure Regulation (EMIR), the Markets talked about solutions.
Regulatory Platform
Although we cannot resolve all the issues and counterparty that they are systematically generating the
challenges the market is facing—for example, the UTI, deltaconX can generate UTIs according to market
agency lending disclosure (ALD)—process that needs to standards and send the UTIs in an end-of-day report
be aligned), we support our clients with our innovative to the counterparty, even if the counterparty is not a
deltaconX software-as-a-service (SaaS) platform to deltaconX user. For our clients, the UTI generated by our
overcome some of the main challenges. system will be sent back to the client’s source system, so
that their records are complete.
Meeting the challenge of fragmented
source data Ensure the use of valid LEIs
Data can be received and processed from multiple Generally, our clients do not identify their counterparty
internal and external sources to generate complete with a legal entity identifier (LEIs). Our system is freely
reports for our clients. This means that if our clients configurable so that our clients can still use their internal
use multiple systems to capture different types of counterparty identifiers, and we transform those into
SFTs, we extract the required data from those various valid LEIs.
sources. Our customers are therefore not obliged
to centralise all these data internally in advance Our deltaconX platform contains a counterparty
of ingestion by deltaconX. We can also source repository in which all static data including LEIs have
information from different trading venues, clearing automatically loaded from the Global Legal Entity
houses, brokers, etc. and combine those flows into Identifier Foundation database on a daily basis. Hence,
one complete report to be sent to the client’s trade we can ensure that only valid LEIs are reported to the
repository of choice. Therefore, the implementation trade repositories by our clients.
efforts of our clients are significantly reduced.
Capture and report SFT lifecycle events
However, some data may not be available in the
transaction capture systems, for example, the type, All material changes to the securities finance
year, and version of the master agreement. Usually, transactions that need to be reported are detected by
our clients use a dedicated agreement with their our deltaconX regulatory platform and the respective
counterparties and specific transaction types. That message to the trade repositories are created
information can be set as a default value in our automatically. Daily collateral and valuation updates,
system so that our clients do not have to provide all as well as margin data reports, are automatically
information in each transaction, but they can use generated and sent to the trade repositories. Our clients
default values. Our clients can decide which values can, therefore, be assured that they comply with their
should be defaulted under which condition and the reporting obligation without spending many hours per
same is possible for data mapping. day generating complete reports for each and every
lifecycle event.
Supporting UTI generation and sharing
Reporting in ISO 20022 format
One of the most discussed topics is the unique transaction
identifiers (UTI) generation and sharing between We have created a generic XML schema which contains
counterparties. The European Securities and Markets all information to fulfil the reporting obligation under
Authority (ESMA) has published a waterfall schema on multiple regulations, including SFTR. The required data
who needs to generate the UTI. Our system can receive will automatically be extracted from the customers’
reports including UTIs generated by the counterparties, source system(s) so that our deltaconX platform
central counterparties (CCPs), or trading venues. can generate the reports according to the applicable
However, in case the UTI is missing in the data set, for regulation’s required format (for SFTR it is ISO 20022
example, because our client has agreed with a specific XML). In addition, we support manual data upload via MS
Regulatory Platform
Excel spreadsheets or manual transaction entry directly the intention of REFIT is to relieve the non-financial
into the deltaconX GUI for those participants having only counterparties from some of their reporting and
a few transactions per month. clearing obligations, REFIT means some substantial IT
changes for the financial counterparties. For example,
Timely and accurate reporting they are now obliged to report on behalf of small non-
financial counterparties if they decide not to report
If our clients opt for system integration, deltaconX themselves. Despite ESMA’s stated intentions to learn
automatically generates reports containing all the lessons of EMIR, we anticipate a similar pattern of
required data in a timely manner via straight-through revisions to SFTR.
processing. In addition, we validate the data before
submitting them to the trade repository. If we do not Highly secure cloud-based solution
receive all the required data for a specific transaction
from the source system, or a data element is not in We decided to build our solution in a highly secure
the required format, we put this transaction on hold private cloud, as changes in the regulations can be
and alert the user accordingly. Our client can then adopted much easier in a centralised hosted cloud
either input the missing data directly on our platform than in multiple on-premise installations at each client.
or add it in the source system and resubmit the Now five years after the go-live of EMIR and multiple
transaction to deltaconX. Similarly, our client can additional regulations, we consider that this was
correct the data element which was provided in the certainly the right approach as each of the regulations
wrong format. Therefore, our clients do not need to is constantly changing. Above all, EMIR went through
perform a data validity check with any other system multiple significant changes.
component. Data validation is a vitally important
process that is included in our service package, and As previously mentioned, these changes are keeping
it ensures that no incorrect data is reported to the the entire market busy, while most of our clients did
trade repository, and ultimately on to the national not even realise that there were multiple changes
competent authorities (NCAs). going on. The reason for this is that we offer a fully
automated reporting service. We manage these
We know that ESMA and the NCAs are looking at changes on behalf of our clients so that they do
rejection statistics, so the risk of our clients contributing not have to adapt their source systems to the new
to bad rejection statistics at their trade repositories is requirements. Our aim is to enable our clients to focus
reduced to a bare minimum. on their core business.
Regulation never ends We are not thinking about the challenges, but we are
thinking of solutions. This was also the reason why I have
The past years have proven that even after entry into decided to leave a market infrastructure that facilitates
force of regulation, the journey to compliance is not over. reporting and moved to provide an intermediary service
that actively supports market participants to overcome
Various changes to EMIR kept the market busy. From these challenges.
the first version over Level 1 and Level 2 validations
to the implementation of the new regulatory technical One of our clients has stated: “I have decided to move to
standards (RTS) back in November 2017, EMIR was deltaconX as I heard a lot of market participants having
constantly evolving. Even after the so-called EMIR re- difficulties to handle the pace of regulatory changes,
write back in 2017, various changes in the validation while deltaconX and their underlying clients never
rules made constant system adaptations necessary. had any issue. This proved to me that deltaconX is an
And still, this journey is not over, as we see the European intermediary that has the full control about their own
Commission’s regulatory fitness and performance systems and services, and has the right knowledge and
(REFIT) programme coming into force soon. Although capabilities to add value for market participants.”
38 SFTR Annual 2019

THE FRONT-TO-BACK
SFTR SOLUTION FROM
TRAX AND EQUILEND
Complete front-to-back Best-in-class Trax GUI provides 30+ years of experience in
solution from point of trade complete visibility and audit trail of regulatory reporting over
to trade repository reporting. every step in the reporting lifecycle. multiple regulations.
Access to the leading Securities Supports lifecycle event Access to industry-wide UTI
Finance trading platform, management, loan and collateral generation and sharing portal.
EquiLend NGT. allocations and centralized
post-trade services.
©2019 MarketAxess Holdings Inc. (the “Company”). MarketAxess, the EquiLend LLC, EquiLend Europe Limited, EquiLend Limited, EquiLend
MarketAxess logo, Trax, Open Trading and “Now you’re in the market” Canada Corp. and EquiLend Clearing Services are subsidiaries of
are trademarks of the Company. MarketAxess Corporation is a member EquiLend Holdings LLC (collectively, “EquiLend”). EquiLend LLC and
of FINRA and SIPC. MarketAxess Europe Limited and MarketAxess Capital EquiLend Clearing Services are members of FINRA and SIPC. EquiLend
Limited are authorised and regulated by the UK Financial Conduct Clearing Services is registered with the SEC and FINRA as Automated
Authority. MarketAxess Singapore Pte. Limited is recognised by the Equity Finance Markets, Inc. EquiLend Europe Limited is authorized and
Monetary Authority of Singapore. This information is not intended to regulated by the Financial Conduct Authority. EquiLend Canada Corp.
represent an offer or solicitation of any financial instrument. is authorized and regulated by IIROC. All services offered by EquiLend
are offered through EquiLend LLC, EquiLend Europe Limited, EquiLend
Limited, EquiLend Canada Corp. and EquiLend Clearing Services. EquiLend
and the EquiLend mark are protected in the United States and in
countries throughout the world. © 2001-2019 EquiLend Holdings LLC. All
Rights Reserved.
SFTR Reporting
Assessing your SFTR reporting build

Jonathan Lee of Kaizen Reporting discusses how to
make an honest assessment on the quality of your firm’s
SFTR reporting
Congratulations! You’ve got the project over the finishing and controls frameworks in place have been paired
line and built your SFTR reporting infrastructure. Is it back. A lack of time (complex project planning), lack
now time to take an independent, honest assessment of resources, or in some cases, lack of opportunity to
of the quality of your reporting? deploy as many resources as were budgeted for are
all reasons cited for a lack of initial controls. This last
In many instances, new regulatory reporting deliveries situation occurs as too many institutions chase too few
have been about getting the project across the line. developers and subject matter experts in the clamour
Initial ambitious plans to have fully reconciled data to build for new regulation.
40 SFTR Annual 2019

SFTR Reporting
In the midst of just getting reports out of the door, there settlement date plus one and each overnight
are a number of questions that have come to light. collateral allocation for those trades?
Have controls been de-prioritised or deemed ‘day two’ • Are you capturing transactions entered into
deliveries at your institution? Have temporary deferrals through auto and self-collateralisation and auto
been applied for encompassing aspects of the delivery borrowing and lending programmes at the central
with your national competent authority (NCA)? Do you securities depositories or sub-custodians?
have appropriate reconciliations in place internally? • Do all of your trades pass the trade repository
Are data guardians, accountable owners for every data validations?
point in your SFTR reports? Hand on heart, have you • Are you seeing significant volumes of alleged
done enough testing? Do you have regression packs trades from the trade repository post-TR
ready to test the impact of all new business deliveries reconciliation highlighting gaps in your reporting?
on your SFTR reporting flows going forward? • Do you have correct securities issuer legal entity
identifiers (LEIs)? CFI codes? collateral type?
Lost in the delivery?
If you are delegating your SFTR reporting, how much
It is a commonly held view that approximately 40 visibility do you receive in relation to these areas from
percent of SFTR fields are challenging to obtain. the reporting party?
Nevertheless, we would urge that you do not sacrifice
data quality in pursuit of populating all fields correctly A recap on what regulators are trying to achieve
or allowing your vendor reporting service to make
incorrect assumptions in pursuit of a complete report. Tackling concerns about the role of securities financing
There is a temptation during the planning and build markets in the last financial crisis and fears that they might
phase to see an instance of value somewhere in the be at the centre of the next financial crisis led securities
production stack of internal systems that appears to be financing transaction reporting to become a top G20
applicable and to configure reports to use that value. agenda point and one of the last to be tackled post-crisis.
These quick fixes or Elastoplast’s if you like, are often
stale, unverified and not validated. Be wary of using SFTR is based on the G20 Financial Stability Board’s (FSB)
data sources where data ownership and governance work on “Transforming Shadow Banking into Resilient
are unclear and adequate controls around the data Market-based Finance: Standards and processes for global
points are not in place. securities financing data collection and aggregation”. A
lot of concern has been expressed about shadow banking
10 tests of the quality of your SFTR delivery and collateral reuse. Specific objectives raised focus on
tackling a lack of transparency, spotting build ups on
Here is just a sample of questions that you should be leverage, identifying interconnectedness and addressing
asking about your SFTR delivery: concerns about the pro-cyclical nature of SFT markets.
• Does your reporting capture every trade in your
risk systems? What does this mean for reporting firms?
• Is every lifecycle event accounted for?
• Are you able to send daily collateral updates to It is no coincidence that SFTR reporting is closely
reflect changes in collateral value on open trades? modelled on the European Markets Infrastructure
• Are you reporting trades facing every lender by Regulation (EMIR) reporting. Both of these regimes
close of business execution date plus one once were born out of the G20 FSB remit to tackle the last
the allocations have been received? financial crisis and help prevent the next financial crisis.
• Are lender changes accurately captured in your The majority of the objectives are the same.
reporting?
• Are you accurately reporting every line of collateral The local competent authorities require the data to
in triparty securities lending and repo trades by meet macro-prudential requirements at a national
SFTR Reporting
and European level in conjunction with the European expensive section 166 skilled person review, external
System of Central Banks (ESCB) global level. The aim is audits, remediation efforts and back reporting.
to achieve this in the most efficient and cost-effective
way given severe resource limitations. Lessons from enforcement actions
Essentially, regulators are expecting to be spoon-fed— The text of the EMIR fine cited the following, which we
not only details of all transactions, collateral, lifecycle believe to be equally applicable to SFTR: “the reporting
events, master agreements, but also industry standards requirements introduced under EMIR were an important
for identifiers for all nine potential parties to a transaction, component in addressing uncertainty around systemic
instrument identifiers, security issuer LEIs, unique trade financial risk, caused by a lack of transparency.
identifiers, rate indices, haircuts, nominal, price per unit The FCA directly communicated the importance of
and minimum notice periods. In addition to all of this, they EMIR reporting requirements to firms in a variety of
are also expecting a whole host of classification data. ways [...] and the authority has published a number
of enforcement actions taken in relation to similar
On top of all of the economics and industry standard failings by other firms in relation to other categories of
identifiers, they also require: country of other transaction reporting.”
counterparty, actual rates, earliest call back dates,
whether the collateral is general collateral or specific, The misdemeanours that the FCA has repeatedly
method used to provide collateral, the principal amount picked up on are:
on value date, collateral market value, maturity dates for • Failing to have adequate systems and controls
collateral securities, the credit quality of those securities, to ensure that reference or ‘static’ data used for
classification of a security (CFI code), collateral type various mandatory fields in the transaction reports
classification and the availability for re-use. submitted to the authority were complete and
accurate;
They want all of this information in the most digestible, • Failing to have in place adequate change
paired and matched state (to avoid double counting) management controls to manage changes
in order to meet their regulatory objectives as soon affecting transaction reporting processes and
and as easily as possible. Anything that prevents systems, and
regulators from achieving that objective will at best • Failing to undertake appropriate testing to ensure
need correcting/back reporting and at worst will be the completeness and accuracy of transaction
subject to fines, public disclosure and possibly legal reports. Most recent notices have called out
measures taken against a business or responsible the inadequacies of periodic and sample-based
senior managers. testing—firms need to test their whole universes.
• Failing to allocate adequate and sufficient
History of enforcement actions for other appropriately trained human resource to undertake
transaction reporting regimes its obligations to report.
The UK Financial Conduct Authority (FCA) alone lists In Kaizen’s experience, regulatory reporting data quality
14 transaction reporting related fines over the past is an industry-wide problem (example form MiFID II). In
decade. This does not include the largest ever fine and the graphic, we summarise the 405 million issues we
first fine levied by the FCA for EMIR reporting failures; have identified after testing over 221 million records in
£34.5 million in October 2017. The EMIR fine and the the last year.
commentary attached are most applicable to SFTR.
The fact that two firms got fined a total of £61.9 million Keeping your nose clean
during March 2019 makes this all the more topical.
These fines also do little to illustrate the much larger The obvious lesson is that the FCA and other NCAs are
number of firms that have been subject to lengthy and actively enforcing transaction reporting. If your firm
42 SFTR Annual 2019

SFTR Reporting
does not have adequate systems and controls in place that nobody is marking their own homework and that
or doesn’t even know how good (or bad) its reporting is; every transaction report, lifecycle event and field is
you could be at risk. thoroughly tested. Not based on a sample, we can help
ensure full end-to-end completeness and accuracy of
Ensuring that operations, compliance and the your SFTR reporting.
business are adequately trained on SFTR will be a
significant first step towards ensuring compliance.
Ownership and governance need to be in place to
ensure accountability for the reporting itself and all
of the underlying data points. SFTR development
resources should be retained post-go-live to aid the
inevitable necessary remediation efforts.
Senior regulatory reporting
We also recommend giving serious consideration

to outsourcing the controls layer. This can provide
specialist (SFTR)
Kaizen Reporting
a great deal of peace of mind and cover off on your

Jonathan Lee
senior manager and certification regime requirements

in addition to basic SFTR compliance. Vendor
solutions can offer economies of scale, independent,
impartial experience and expertise. Regulatory
testing service offerings such as Kaizen’s ensure
Reporting Challenges
Maximising SFTR benefits

Markus Büttner of Comyno explains why firms shouldn’t
implement SFTR with a sole view on reporting requirements
The Securities Financing Transactions Regulation They will have a consolidated view on the firm-wide
(SFTR) is at everyone’s door now. Since the timeline collateral portfolio and will have implemented the
is set by the regulators, discussions are progressing necessary infrastructure to efficiently manage liquidity
and the first customer projects have are kicking off. and risk while increasing their revenues at the same
There have been many articles published about SFTR time. If your firm has invested in such an infrastructure
business requirements in general, but this one will environment already, the implementation of the new
focus on Comyno’s unique strategy towards getting the reporting will be an easier task because SFTR is
maximum returns out of the new reporting regulations requiring exactly that consolidated data of all your
for our clients and how it correlates with our company securities finance transactions across asset classes
goal of supporting the market with best of breed and business units and is a full view on the firm-wide
software and services. collateral portfolio.
What is the key for us when we think of SFTR? If your firm has not yet invested in such a consolidated
infrastructure—SFTR will force you to do so at some
As experts for all business and technical matters point further down in the value chain. This is exactly the
in securities finance, we have one simple message: point when Comyno comes in to help to define how to
do not implement SFTR with a sole view on the bring all of the collected and required data into the right
reporting requirements, but have a second thought place and format. As a result, your company will be able
about the synergies for the business it can create if to report SFT properly and will increase the efficiency of
you do it right. collateral allocation at the same time.
From our point of view, there is huge potential in This business-driven approach led towards our decision,
turning the cost you are forced to bear for SFTR to implement and offer a full-scale SFTR system solution
into real benefits for your business. Therefore, it is to the market instead of just providing a tool to collect
essential that traders and collateral managers jump the required data and fill the fields in the reports.
on the SFTR train in an early stage of the project,
to better understand what it is about, to be able to Our C-ONE trading/collateral management and C-ONE
add business ideas to the project and make use of connectivity/reporting platform initially was built
synergies the reporting has to offer. embedding the SFTR requirements as their core data
structure. Now we are continuing with adding the
Why are we convinced that there are missing pieces to deliver SFTR reporting fully in line
such synergies? with the regulator’s requirements.
This has a lot to do with the many projects we already To better explain our software approach to SFTR, a
did in the securities finance arena in general and reminder of the current Comyno C-ONE enterprise version
specifically in the area of collateral optimisation. seems appropriate. The innovative C-ONE Enterprise
Clearly, we see that firms who have put effort on a suite offers a complete solution for Securities Finance
collateral optimisation strategy will have torn down Trading and Collateral Management, covering the
their internal (product) silos already. complete value chain of the corresponding transactions.
44 SFTR Annual 2019

It is built as a ‘hybrid platform’—incorporating features able to provide all system features as single modules
for an in-house trading and collateral management as well.
system and a multi-entity, multi-product trading platform
across asset classes. In other words, the SFTR functionality can also be
used as a stand-alone tool for SFTR reporting from
This enables our clients not only to manage their whole your legacy SFT in-house systems, or out of the box
securities finance business with C-ONE but also grants for firms already using our full enterprise suite.
online access to and for their clients and counterparts
including white-labelling potential simply via the web. One of the biggest cost drivers for the industry is the
multitude of internal and external parties involved in
Not only does this provide seamless possibilities for securities finance transactions, the variety of software
position sharing, but also locates management as well systems and IT components as well as a big number
as affirmation processes. of manual workarounds and interfaces which are
necessary to fill gaps in the underlying systems.
Furthermore, clients and counterparts can see their
side of the trading activity as well as their side of the Comyno has done no less than tackle this industry
collateral- and exposure management. Even the PnL challenge for the benefit of our market with its
features can be used by all entities with access to solution: C-ONE Enterprise with all its different
the platform. modules is now covering the whole value chain,
both from a business and technical perspective.
If the word existed (maybe it does from now on),
we would call C-ONE a ‘tribrid platform’—because it Just imagine for a second
incorporates total connectivity to every internal and
external system or third party entity which might be From generating the trade idea, finding your counterparty,
imagined. This includes the possibility to connect with online-negotiation, affirmation and trade booking,
various distributed ledger technology platforms as well. unique transaction identifiers (UTI) generation, collateral
allocation or triparty import, reconciliations and feeding
To stick to our word of the ‘one-stop-shop’ slogan, the the trade to your in-house systems, settlement and SFTR
next logical step was to include SFTR into our product reporting—all this now can be performed fully straight
suite since we wanted to keep our other promise, to be through on one platform which is our C-ONE Enterprise.
Of course, a firm can’t jump from a scattered IT according to their value add, cost impact and pain points.
landscape to a single platform in one go. But the The idea of then starting to implement the most crucial
good news is that C-ONE, either as a whole or just steps at first brings us back to the topic of SFTR because
some of its modules can be added at any point and its implementation by using the C-ONE solution would
expanded and migrated step by step over time. subsequently not only solve your reporting obligations.
We would evaluate your existing infrastructure carefully It will be the first step and basis towards modernising and
to start with and put together a road map with all the fully digitalising your securities finance infrastructure
necessary steps and processes and prioritise them and gaining various business benefits at a lower cost.
46 SFTR Annual 2019

Are you ready to report for SFTR ?
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www.regis-tr.com commercial@regis-tr.com
REGIS-TR is a leading European trade repository offering

reporting services covering all the major European trade
repository obligations. Our unique expertise in Securities
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choice as your TR partner for SFTR. Scan the QR code to
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SFTR Complications
Pre-matching:
not the silver bullet as hoped
Catherine Talks of UnaVista suggests that pre-matching is
not the silver bullet the industry is hoping for and may even
create additional complications
Matching the two sides of a trade is one of the most Time to resolve validation failures
important and historically difficult parts of regulatory
reporting. Recent data from the European Securities With such a short timeline between trade execution
and Markets Authority (ESMA) showed that just 40 and the reporting obligation cut off time, there is very
percent of swaps trades reported under the European little time to perform and correct the matching and
Market Infrastructure Regulation (EMIR) are matched reconciliation prior to sending the report. If the report is
in the trade repository (TR). When matching rates not corrected by the reporting required time, then it must
are this low it makes it very difficult for the regulator be sent to a TR regardless of the number of residual pre-
to accurately monitor systemic risk. To increase matching breaks. In addition, time must be allowed for
the success rate the industry has created a number potential resolutions after a report is sent into a TR and
of solutions, aiming to improve the data quality there may be a number of validation failures to address
and reduce the number of breaks that result in the before the message can be accepted. It is only once
reconciliation process. the message is accepted by the TR that the reporting
obligation is complete.
There are two schools of thought on the best way to
improve the process, pre-matching and post-matching. Disparate vendors and data
Pre-matching is a process where two parties send their Pre-matching requires both counterparties to use the same
portfolio of messages into a platform for a reconciliation pre-matching vendor for the same report dataset to attempt
to take place prior to reporting to the TR. The idea is that a match. As pre-matching is not a regulated requirement
if the data is matched at source then it will naturally there may be some firms who simply decide not to utilise a
match once inside the TR. There are many market pre-matching vendor. If the counterparty is using a different
vendors looking to implement pre-matching processes vendor then a match will not be possible as there isn’t an
that could be used as platforms to disseminate the inter-vendor matching process in place. Many of the pre-
unique transaction identifiers (UTI) between parties, matching services also only offer the service for some of
ensuring improved pairing within the TR. Although there the four reportable asset classes, meaning a firm may need
are some benefits to attempting pre-matching, there are to use multiple pre-matching services to get the sought-
several complications which could cause pre-matching after benefit, but this leads to the undesired outcome of
to have a reduced success rate. your data in more disparate systems.
SFTR Complications
Data issues Improving the inter-TR matching rates
Most pre-matching and reconciliation takes place on a Although matching rates within EMIR still have a long
subset of data. To ensure a good level of matching, the way to go, there are a number of reasons that SFTR
number of fields required to match is often restricted to should see an improvement. Firstly, unlike EMIR, ESMA
core economics, depending on the pre-matching vendor has introduced a standardised format for the reporting
model. In contrast, the number of fields required for the to a trade repository, this means no conversions will
inter-TR matching process is vast (upwards of 90 fields need to be made during the inter-TR matching process,
over the matching phases). It is therefore possible that this should really improve matching rates. ESMA has
even with a pre-matching process that there may be also prescribed some field level tolerances which allow
breaks at the TR matching level. a marginal difference in some values to count as a
match, which means even if certain attributes are a
An alternative method decimal place off due to a rounding error, those reports
can still match.
UnaVista believes that the most effective route to
better matching is using the intra- and inter-matching Industry bodies anticipate that more than half of the
capabilities of the trade repositories. These will provide volume of SFTR transactions sent to TRs will actually
the best results with the fewest delays. This has also be single sided. The total number of transactions that
been recognised by the regulators, who have prescribed are eligible (and able) to be reconciled will, therefore,
that TRs must perform the inter-TR matching process. be relatively small in comparison to the number of
submitted transactions. So, matching SFTR reports may
Intra-TR matching not be as onerous as it has been in previous regulations.
Once a transaction is accepted by a TR it is then subject Ultimately the more a firm can do to ensure their data is
to the first level of trade repository reconciliation, called correct at every stage of the reporting process the better.
an intra-TR matching. This is where the TR uses the However, our belief is that pre-matching is not the silver
matching key (UTI, reporting party, other counterparty bullet the industry is hoping it is and may even create
and master agreement) to seek the other side of the additional complications for accurate reporting.
transaction within its own repository of transactions.
If both parties report to UnaVista then the results of
this will be displayed back to the clients along with any
breaking fields. If there is no match within UnaVista’s
Trade repository then UnaVista will give the transaction
a reconciliation status of ‘unpaired’.
Inter-TR matching
UnaVista will keep seeking an internal match until the

inter-TR matching process is undertaken on T+2. The
inter-TR process works by each TR providing a file in XML
format containing the matching key, where two TRs have
Product manager
the same key then a trade is ‘paired’ and a separate file

Catherine Talks
containing the trade economics is exchanged. UnaVista

then displays back to the client both sides of the
UnaVista
reconciliation i.e. the client side and counterparty side

along with any differences. If there are no differences,
then the transaction moves to a state of ‘reconciled’.
50 SFTR Annual 2019

Data Analytics
Uniformity may be the new differentiator

David Lewis of FIS suggests that if the market can move
effectively in the right direction, the industry will realise it
loves SFTR
While this may sound like a version of “doublespeak” One of the positive spinoffs, as described by Andy Dyson,
from some new dystopian world, there is, like in the book, ISLA CEO, from the efforts being applied to analysing
1984, some basis in the suggestion that the observations and implementing the Securities Finance Transaction
in this article will only tell you what you already know. Regulation (SFTR), is that the industry is being forced to
52 SFTR Annual 2019

Data Analytics
shine a light on areas that have hitherto lacked the kind efficiently and accurately report them within the quality
of attention that they have perhaps deserved. and time constraints laid down in the regulation.
In order to meet the stringent and complex demands Both the dynamics of quality and time (to delivery)
of SFTR, market participant organisations and their will weigh heavily on those reporting to their regulator,
providers are expending significant resources on data via their chosen trade repository. The time aspect can
and processes. This includes not only adding and be altered through process and system/technology
maintaining data items that they have not needed to enhancements, but the key to quality is a different
consider before, such as legal entity identifier (LEIs) but animal altogether. While pre-matching is not a direct
potentially revamping their entire booking and position requirement of the regulation, the matching rates
management process from start to finish. The ultimate arising from the data reported to the market trade
aim, of course, is to be able to satisfy their regulators repositories will become the benchmarks by which
that they not only have a good grip of exactly what quality could well be measured. Early bilateral testing
their positions and obligations are, but they can also of data between some the International Capital Market
Data Analytics
Association (ICMA) members highlighted just how the vendors, FIS included, are behaving kindly to each
difficult a task this was going to be, showing that the other in the common aim of bringing this project to a
somewhat fundamental data items of trades, including successful conclusion.
the security traded, the volume of that security and
the rate charged, seemed to be causing most of the In real terms, the output of these efforts is likely to
comparison mismatches. The fact that such mismatch be more commonality in booking and processing
issues could translate not into embarrassment and methods, greater automation and higher rates of
red faces but to real and potentially substantial fines straight-through processing, coupled with solid
has brought the need to prepare for SFTR properly into regulatory reporting compliance. The work required to
sharp focus. bring these often-disparate approaches to the market
together into a single, unified set of reportable data
At the recent Securities Lending Times Technology is no small task, and that task could conflict with
Symposium, some of the discussions revolved the desire of each market participant to retain their
around the need to get the basics right in our market, methods of working and managing their businesses.
and rarely has a more accurate statement been made It is these individual approaches to working that can
when considering the requirements of SFTR. As an often deliver the competitive edge or differentiator that
industry, we have an unusually varied approach to protects each organisation’s market position. With that
undertaking the activities of the securities finance in mind, the key will be to concentrate on the areas of
and collateral business and it is those differences commonality that make sense, without degrading the
that may well cause the greatest issues. While identity and advantages each participant has built up
tokenisation and distributed ledgers may be exciting over many years.
buzz words and attractive bandwagons to jump
aboard, the common data model (CDM) sounds Whatever route the industry takes to get there by next
positively pedestrian, even tedious. If the industry April, it is the standardised reporting outputs that the
can get past that, and move toward not only a CDM regulator will be looking at, as processed and delivered
but a more unified model of trading and position by the authorised trade repositories who operate
keeping, then the foundations for the more exciting under strict and well-practised record acceptability
developments will be all the more solid. criteria. In that respect, it makes good sense for
market participants to work toward common output
Few would advocate that all market participants should testing regimes, as being promoted by one prominent
suddenly become carbon copies of each other, but the market consultant. As the vendors work together,
way that our business is undertaken could certainly with each other and their clients, to try and reach
benefit from more standardisation. This would be one processing and output standards, we will be working
logical response to the challenges of SFTR and other toward a common data model in terms of output. The
regulations where faster, more accurate data exchanges only way to achieve that effectively is, of course, to get
will be key to market success. One other, and certainly the inputs and data storage to also conform to new
potentially as important, response could be increased standards of commonality.
mutualisation. At FIS, we have witnessed the benefits
to our clients of bringing a utility approach to the post- If the market can move effectively and swiftly in that
trade management of derivatives, for example, and the direction, under the banner of regulatory conformity or
success of this kind of mutualisation should not pass otherwise, then the uniformity of data, trade booking,
the securities finance industry by. The advent of SFTR recording and management will bring operational
has certainly brought about an unprecedented sense efficiencies and a direct positive impact to the bottom
of collaboration right across the market. Witness the line of all those that achieve it. Only then, just like
various vendor and market participant groups showing Winston did in 1984, will we wake up from the nightmare
members working diligently together toward resolving of conforming to the authority of the regulator and
the industry-wide challenge that is SFTR; yes, even realise that we love SFTR.
54 SFTR Annual 2019

Vendor Profiles
Vendor Profiles
www.broadridge.com
Broadridge, a global fintech leader with $4 billion in revenue, provides communications, technology, data and analytics.
Broadridge offers a suite of global, front to back office securities finance solutions for the buy side and sell side. This
includes integrated or standalone systems for securities lending, repo, collateral management, collateral optimisation,
and an end-to-end transaction reporting solution for SFTR. Broadridge’s solutions help customers to comply with new
regulations, increase efficiency, improve strategic decision making and make more intelligent use of capital, balance
sheet and liquidity.
Broadridge also offers consulting services to help market participants design their target operating models for SFTR.
This service provides a practical blueprint for front-to-back changes to overall architecture, organisational structure,
business processes and location strategy.
In addition, Broadridge provides project management, business analysis and testing support to augment firms’ internal
SFTR project teams and help them comply with the rules in a timely manner.
Broadridge’s in-depth expertise in both securities finance and trade reporting regimes including US (CFTC), Europe (EMIR,
MiFID I and II), will enable clients to adapt to SFTR smoothly while minimising operational disruption and reducing the
resource impact of complying with the reporting mandate.
For more information about Broadridge and our proven securities finance, collateral management and transaction
reporting solutions, please visit our website.
56 SFTR Annual 2019

Vendor Profiles
Hervé de Laforcade, global head of marketing

+33 (0) 1 70 83 52 30
solutions@calypso.com
www.calypso.com
Calypso is building upon its cross-asset product suite and award-winning post-trade processing, collateral and securities
finance platform to help clients address the SFTR regulatory reporting requirements.
A single database/source of truth for data management, combined with an event-based approach to all SFTs required by
the regulation, means Calypso aligns perfectly to SFTR requirements. Add to this the Calypso fully integrated Collateral
Management module, complete with back-office message integration, and our clients will be well positioned to manage
and track their SFTR reporting needs.
Our integrated, cross-asset platform enables firms to centralise security pools, facilitating optimal use of cash and
securities inventory for trading and exposure management. From trade input to post-trading processing, the flow is
seamless offering complete and instant transparency.
Calypso can be deployed to cover all aspects of securities lending, repo and collateral management—on an incremental
basis, where required. Indeed, many clients have started by implementing a single module and expanded usage later, so
combining an initial tactical win with a strategic solution.
Combining a solution for repo and securities lending may seem obvious, but by also adding in collateral management
and optimisation, with cross-asset coverage from trade initiation to risk, post-trade processing and reporting, Calypso’s
clients can see true transformation.
About Calypso Technology, Inc.

Calypso Technology, Inc. is a cloud-enabled provider of cross-asset front-to-back solutions and managed services for
financial markets with over 35,000 users in 60+ countries. Its award-winning software improves reliability, adaptability,
and scalability across several verticals, including capital markets, investment management, central banking, clearing,
treasury, liquidity, and collateral.
Calypso is pioneering innovative technologies (native cloud technology, AI, Big data) that reimagine capital markets.
Vendor Profiles
Markus Büttner, founder and CEO

+49 (0)173 672 6225
markus.buettner@comyno.com
Admir Spahic, director

+49 (0)177 4367027
admir.spahic@comyno.com
Frank Becker, head of business development

+49 (0)151 4249 0801
frank.becker@comyno.com
www.comyno.com
Comyno is a fintech software and business consultancy boutique with a clear focus on all securities finance related
topics. For more than ten years we have been specialists in securities lending and repo, collateral management, treasury
and liquidity management, clearing and regulatory topics. Our expertise combines strategic advisory and a digital IT-
platform technology. We deliver tailored solutions for real straight through processing with various connectivity options
to our clients. Comyno also offers in-house workshops and training for all security finance and treasury-related products.
Comyno’s C-ONE Enterprise suite is a digital Securities Finance Trading platform built to deliver straight-through-
processing. It offers a real-time front-to-back office solution which at the same time facilitates the interaction to
numerous third party service providers such as electronic trading platforms, Tri-Party collateral agents, trade repositories
and CCPs. C-ONE offers various data management technologies and data analytic tools within a single digital platform.
It has an intuitive and easy-to-navigate customised dashboard/cockpit using distributed ledger technology.
The plug and play technology provides various analytical tools such as: C-One Collateral; C-One Trading; C-One Risk Management;
C-One SFTR Reporting; C-One Fairness Algorithms for the automated allocation of fund inventory to trade requests.
Customers can choose to use the entire platform to run their Securities Finance business, or alternatively choose any
functionality as a module to bridge the gaps of their legacy infrastructure as required.
Comyno’s advisory specialist are already working on different SFTR implementation projects and therefore could also
help your firm to comply with this reporting regime in time and budget. Our SFTR Reporting tool covers the increasing
regulatory and transparency requirements. A fully traceable reporting and message flow is available to comply with the
latest audit requirements that will enter into force on April 2020.
Consulting
Strategic Consulting and Advisory | Project Management | Business Analysis
Securities Finance Software

C-ONE: Connectivity | Trading SFTs | Collateral and Risk Management. | SFTR Reporting | Fairness Algorithms
58 SFTR Annual 2019

Vendor Profiles
Joe Channer, CEO
David Field, head of prime services and securities finance practice

+44 (0) 203 890 4803
david.field@deltacapita.com
Julian Eyre, head of business development

+44 (0) 203 890 4803
julian.eyre@deltacapita.com
www.deltacapita.com
Delta Capita is an international business and technology consulting and managed services provider.
We work with many of the world’s most important financial institutions helping them comply with regulatory obligations,
transform and simplify operations, reduce cost and adopt ground-breaking models and technologies.
We operate an end-to-end consulting model, including advisory, solutions and delivery capabilities and high-quality
specialist managed services.
Managed Service Solutions

Post-trade operations and technology managed services: Collateral and exposure management and billing, asset
servicing, operation controls, stock settlement record and financial transaction ledger. UK-based industry practitioner
servicing team.
Software Solutions
Front office inventory management, trade booking and position keeping
Pre-trade risk tools: credit limit management and balance sheet usage/optimisation
Consultancy
Target operating model
Vendor selection
System implementation
Regulatory: BASEL III, SFTR, MiFID II, EMIR, BCBS IOSCO
Post-trade
Vendor Profiles
Fabian Klar, director sales and customer relations

+41 41 562 5838
fabian.klar@deltaconx.com
deltaconX is a “full-service” provider offering a unique software and support package specifically tailored to the
community of European financial, energy, and commodity trading organisations.
Our offer
We are a “full-service provider” to unify all regulatory compliance processes across multiple regulations with the
aim to:
Reduce all manual efforts through automated processes
Give full control and visibility over all relevant data
Reduce the total cost of ownership
Our service
Our service includes the following performance:
Monitoring of regulations and interfaces
Adjustments to regulatory changes or changes to the interfaces (for example, EMIR Validation Rules, MiFIR 1.3
Release, etc.) - Customer is always compliant
Operation and development of the deltaconX regulatory platform
Support and maintenance
Our platform
Our platform is a MultiRegTech Solution that combines different requirements for regulatory reporting and market
surveillance in a single solution.
It’s also an innovative software solution specifically tailored to the needs of European financial, energy and commodity
traders, enabling them to meet their regulatory obligations under:
EMIR
SFTR
MiFIR Art. 26
FinfraG
MiFID II Art. 58
REMIT
MiFID II Art. 20/21
MAR
Our platform is a source-agnostic system offering complete input and output flexibility, and a full audit trail of data
ingestion, processing and transmission.
60 SFTR Annual 2019

Vendor Profiles
Nick Larrieu, EMEA head of sales, DTCC Europe Ltd

+44 (0) 203 116 2355
nlarrieu@dtcc.com
www.dtcc.com/SFTR
SFTR@dtcc.com
With over 45 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services
industry. From operating facilities, data centres and offices in 16 countries, DTCC, through its subsidiaries, automates,
centralises, and standardises the post-trade processing of financial transactions, mitigating risk, increasing
transparency and driving efficiency for thousands of broker/dealers, custodian banks and asset managers worldwide.
DTCC’s Global Trade Repository (GTR) is the industry’s preferred solution for global OTC derivatives reporting. GTR
holds detailed data on OTC derivatives transactions globally and has grown to become the largest trade repository
in the world, providing new insight and perspectives to better monitor and respond to the regulatory reporting
requirements of our clients. It maintains approximately 40 million open OTC positions per week and processes over
one billion messages per month.
GTR will be extending its regulatory reporting capabilities within the securities financing market, helping clients meet
new reporting requirements under the Securities Financing Transactions Regulation (SFTR). Leveraging the GTR
infrastructure, our SFTR solution supports all product types to be reported under SFTR including repo and reverse repo,
securities and commodities lending and borrowing, sell/buy-back, buy/sell-back and margin lending and borrowing.
In addition to supporting the core trade repository requirements, our value-added services, including data transformation
tools and consulting services, allow DTCC to offer a one-stop, end-to-end solution for SFTR.
To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, Twitter, YouTube and Facebook.
Vendor Profiles
Paul Lynch, managing director, global head of products

+1 212 901 2281
paul.lynch@equilend.com
Dan Dougherty, director, global head of CRM and sales

+1 212 901 2248
dan.dougherty@equilend.com
www.equilend.com
EquiLend is a leading provider of trading, post-trade, market data and clearing services for the securities finance
industry with offices in New York, Boston, Toronto, London, Dublin, Hong Kong and Tokyo. EquiLend is owned by
BlackRock, Credit Suisse, Goldman Sachs, JP Morgan, Bank of America Merrill Lynch, Morgan Stanley, National
Bank of Canada, Northern Trust, State Street and UBS.
EquiLend operates NGT, the securities finance industry’s most active trading platform, as well as a Post-Trade
Suite for securities finance operations. DataLend provides performance reporting and global securities finance
data to agent lenders, broker-dealers and beneficial owners. EquiLend Clearing Services offers CCP services and
connectivity. EquiLend SFTR offers a no-touch, straight-through solution for Securities Financing Transactions
Regulation. EquiLend Spire is a front-, middle- and back-office platform for securities finance businesses.
62 SFTR Annual 2019

Vendor Profiles
Charlie Bedford-Forde, director, sales

+44 (0) 207 260 2299
charlie.bedford-forde@ihsmarkit.com
www.ihsmarkit.com/sftr
IHS Markit, in partnership with Pirum Systems, offers an end-to-end reporting solution for Securities Financing
Transactions Regulations (SFTR). The collaboration sets an industry-wide standard to aggregate, exchange, enrich,
reconcile and report trading activity across all in-scope SFTs. Building upon advanced connectivity with CCPs,
triparty agents, venues and trade repositories; the turn-key service leverages a proven track record of delivering
industry-wide reporting solutions and more than 16 years of partnership with the securities finance community.
Key benefits:
Built-in infrastructure and relationships: An extensive network of data contributors, built over 16 years,
represents $21 trillion of inventory held by over 120,000 underlying funds. Over three million transactions are
processed and matched each day using a reporting specification covering the majority fields required by the
SFTR legislation.
Comprehensive product coverage: IHS Markit’s unique Design Partner framework means the product benefits
from the ongoing input and feedback of many of the world’s largest securities finance participants across
securities lending, repo, prime brokerage and commodities finance markets.
Flexibility: The system’s modular architecture helps firms meet not only their individual needs for SFT reporting
but also includes customisable delegated reporting modules to support on-behalf reporting. This flexible
approach extends outward to data sources such as CCPs, triparty agents, trading venues and trading platforms.
Future-proof compliance: A forward-looking approach to design provides flexibility to support anticipated
future securities finance transaction reporting regimes in a holistic way.
Vendor Profiles
+44 (0) 207 205 4090

enquiries@kaizenreporting.com
www.kaizenreporting.com
Kaizen Reporting are specialist regulatory reporting experts on a mission to improve the quality of regulatory
reporting in the financial services industry. They’ve combined regulatory expertise with data science to develop
our multi award-winning assurance service ReportShield which provides full visibility of the quality of regulatory
reporting providing accuracy testing, reference data testing, advanced regulatory reconciliations, control framework
and training.
Whether it’s MiFID II, EMIR, Dodd-Frank, SFTR or another G20 regulation, Kaizen helps some of the world’s largest
banks, asset managers, hedge funds, brokers and other financial institutions to reduce costs and increase
confidence in their reporting.
64 SFTR Annual 2019

Vendor Profiles
+44 (0) 207 797 1122

www.lseg.com/unavista
UnaVista is an award-winning technology platform from the London Stock Exchange Group. UnaVista helps firms to
reduce operational and regulatory risk through a range of regulatory reporting, reference data and analytics solutions.
As a regulated platform, UnaVista helps thousands of firms meet their compliance obligations, reporting more than
eight billion transactions for global regulations including EMIR, MiFID II across all asset classes. UnaVista is in the
process of becoming an approved trade repository for SFTR, and helping firms prepare their data and processes with
a range of technology and educational led products.
Following the fulfilment of their transaction reporting obligations, UnaVista helps firms make more from their data, with
advanced analytics to provide peer-to-peer transaction intelligence and surveillance alerts. UnaVista is also the source
for a range of unique global identifiers such as SEDOL and LEI and offers firms access to new derived alternative data.
Vendor Profiles
For more than 30 years, Murex has been providing enterprise-wide, cross-asset financial technology solutions to
capital markets players. Its cross-function platform, MX.3, supports trading, collateral management, treasury, risk
and post-trade operations, enabling clients to better meet regulatory requirements, manage enterprise-wide risk, and
control IT costs.
With more than 50,000 daily users in 60 countries, Murex has clients in many sectors, from banking and asset
management to energy and commodities. Murex is an independent company with over 2,200 employees across 17
countries. Murex is committed to providing cutting-edge technology, superior customer service, and unique product
innovation.
The MX.3 platform addresses the core collateral management and securities finance challenges facing market
participants. It offers a single integrated framework for enterprise-wide margining, optimisation, regulatory compliance
and collateral trading. Moreover, it delivers advanced exposure management monitoring, while offering broad product
coverage and full lifecycle management.
Murex’s collateral management and securities finance solutions have been designed to help banks to meet complex
regulatory demands, including FRTB, SFTR and non-cleared margining rules. With the compliance deadline for initial
margin regulation fast approaching, thousands of financial institutions are seeing an overall increase in the demand
for collateral assets. At the same time, an increase in the consumption of high-quality liquid assets is significantly
impacting the supply. Securities finance and treasury desks must put the right technology in place that will allow them
to act as business enablers and adapt to these stringent market conditions.
Contact the Murex team today at info@murex.com to learn more about how we help our clients to establish new
operating models while also meeting regulatory deadlines.
66 SFTR Annual 2019

Vendor Profiles
Rajen Sheth, CEO

+44 (0) 207 220 0963
rajen.sheth@pirum.com
Phil Morgan, chief commercial officer

+44 (0) 207 220 0965
philip.morgan@pirum.com
www.pirum.com
Pirum Systems is the market leader in real-time automation and connectivity services to the securities finance
industry, providing unparalleled connectivity with counterparties, CCPs, trade and collateral venues. Pirum Systems
is ready to assist you in connecting.
Pirum provides a secure processing hub which seamlessly links market participants together, allowing them to
electronically reconcile and process stock lending and repo transactions as well as providing exposure, margin and
collateral management solutions. Our clients benefit from increased processing efficiency, greater STP, reduced
operational risk and improved profitability.
We deliver highly innovative and flexible services which are tailored to fully support the industry’s complexities
and evolving business processes. With our extensive existing client base and our renowned service quality, we are
invariably seen as the users’ service provider of choice.
Pirum’s Services include:

• Tri-party and bilateral connectivity
• Exposure calculation and reconciliation
• Margin and collateral management
• CCP gateway
• Real-time contract compare
• Billing reconciliation
• Billing delivery
• Real-time mark automation
• Automated returns
• Automated loan release
• SPO and other payment processing
• SFTR reporting
Vendor Profiles
Ana Ruxandra Iliescu, client relationship manager

+352 243 36541
Ana.ruxandra.iliescu@regis-tr.com
Silvia Pelcova, client relationship manager

+34 91 709 5238
Spelcova@regis-tr.com
Alberico Bello, client relationship manager

+44 (0) 207 862 7073
alberico.bello@clearstream.com
REGIS-TR is a leading European trade repository offering reporting services covering all the major European trade
repository obligations. We are one of Europe’s largest TRs for EMIR, with around 1500 clients and weekly new trade
volumes averaging over 30 million. We also have REGIS-TR UK in London, ready to provide continuity of service to UK
clients and those reporting on their behalf if the UK leaves the EU.
Our parent company groups include Clearstream, Eurex Repo and BME Clearing Repo, giving us unrivalled access to
in-house securities lending, repo and collateral management practice and expertise. This is reflected in our solution
design and day-to-day services.
Whether you will be reporting through one of our vendor or infrastructure partners, delegating your submissions
or prefer to be hands-on with your TR, we are ideally placed to offer a comprehensive, fully-informed SFTR
reporting service.
68 SFTR Annual 2019

Vendor Profiles
www.traxmarkets.com
Trax, the post-trade services engine of MarketAxess, is a leading provider of trade matching and regulatory reporting
services and is a trusted source of comprehensive and unbiased pricing and liquidity information to the global
securities market.
Trax processes on average more than 1 billion cross-asset class transactions annually on behalf of its community
of over 600 entities including approximately 12 million fixed income transactions. Trax operates an Approved
Publication Arrangement (APA) and Approved Reporting Mechanism (ARM) for MiFID II trade and transaction
reporting in addition to providing support for other regulatory regimes.
Trax is based in London and was originally established in 1985. Acquired by MarketAxess in 2013, Trax is a trading
name of Xtrakter Ltd and is a wholly owned subsidiary of MarketAxess Holdings, Inc.
Notes
70 SFTR Annual 2019

THE QUEEN’S AWARDS
FOR ENTERPRISE:
INNOVATION
2017
Smart Technology for
Collateral and Securiti
Finance
The repo market has bounced back but balance sheet and cost-benefit
pressures persist. Now is the time to invest in the latest technology to
reactivate your enterprise asset inventory trading.
MX.3 for Collateral and Securities Finance offers a single

MX.3 for Collateral and Securities Finance offers an integrated framework for:
framework for:
Compliance with Basel III and ESMA SFTR standards
Enterprise-wide margining and optimization
Advanced exposure management monitoring
Broad product coverage and full lifecycle management
Make the smart move, talk to Murex to find out more.
@murex_group
Discover more at murex.com
murex @murex_group info@murex.com

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SFTR Annual

THE SECURITIES FINANCING & DERIVATIVES

The final countdown

Industry Collaboration SFTR Outlook

Risk Exposure SFTR Wonderland

Compliance Advice SFTR Challenges

4 SFTR Annual 2019

SFTR Landscape Regulatory Platform

SFTR Reporting Reporting Challenges

SFTR Complications Vendor Profiles

6 SFTR Annual 2019

In the driver’s seat

10 SFTR Annual 2019

Optimize funding and collateral decisions

12 SFTR Annual 2019

A price to pay for change and progress

industry has no Unintended—but highly desirable—

14 SFTR Annual 2019

Perhaps a little late for the SFTR compliance deadline,

This journey will over time disrupt the securities finance

the trade repositories

across our two organisations

Trax and EquiLend have made a point of working closely

with approved trade repositories to build connectivity,

18 SFTR Annual 2019

EMIR REMIT MAR FinfraG MiFIR / MiFID II SFTR

Broadridge can help

Broadridge is helping existing clients and other market

to overall architecture, organisational structure, business

processes and where appropriate, location strategy.

Broadridge’s SFTR consulting service offers:

22 SFTR Annual 2019

REPOSITORY 90% of top 20 80% of top 20

OUTSTANDING VALUE-ADDING HANDLING

ROBUST AND EFFICIENT STRONG PARTNER

Leading global Central Counterparty

Leading European interdealer and dealer-to-client Repo markets

EMPOWERING YOU WITH LEARNING AND TRAINING

36 CPD-certified and CISI-endorsed training 4,550 registered 11 face-to-face 40 educational and

24 SFTR Annual 2019

26 SFTR Annual 2019

Introduction Overview Reporting basics Transaction

Reports & Action Field by field Reporting Relationship

This course is provided by Market FinReg.

A fantastic communicator, with a huge New September dates

28 SFTR Annual 2019

The European Securities and Markets Authority’s Booking model

30 SFTR Annual 2019

Delta Capita is the international business & technology consulting and

We operate an end-to-end consulting model, including advisory, solutions and

Your trusted change partner for:

Navigating the SFTR landscape

32 SFTR Annual 2019

implement Securities Financing Transactions Regulation regulation is enacted in additional jurisdictions?And,

34 SFTR Annual 2019

38 SFTR Annual 2019

Assessing your SFTR reporting build

40 SFTR Annual 2019

42 SFTR Annual 2019