Securities Financing Transaction Regulation

The Securities Financing Transaction is an EU Regulation 2015/2365 on transparency of securities financing transactions and of reuse (SFTR) and amending Regulation (EU) No 648/2012 which entered into force on 12 January 2016,subject to certain transitional provisions.

What is the SFTR?

The regulation responds to the need to enhance the transparency of securities financing markets and thus of the financial system. The regulation covers any securities financing transaction which uses securities to borrow cash or vice versa. It does not include derivative contracts which are already covered in EMIR but does cover liquidity swaps and collateral swaps.
Securities Financing Transactions (SFTs) can be used to describe any transaction where securities are used to borrow cash, or vice versa. SFTs as defined in the SFTR include:

  • Repurchase agreements (repos),
  • securities or commodities lending activities
  • and buy-sell back transaction or sell-buy back transaction
  • margin lending transaction

The new rules on transparency oblige the counterparties to the transaction to report details regarding securities financing transactions (SFTs) concluded, whether they are financial or non-financial entities. The counterparty may delegate this reporting. The reporting of the SFT should include, but is not limited to:

  • The parties to the transaction
  • The principal amount, and currency
  • The composition of the collateral
  • Method used to provide collateral
  • Whether the collateral is available for reuse or has been reused
  • The substitution of collateral at the end of the day
  • The repurchase rate, lending fee or margin lending rate
  • Any haircuts applied
  • The maturity date
  • The value date
  • The first callable date
  • and the market segment

The Central Bank was designated national competent authority (NCA) for SFTR in the State by Statutory Instrument No. 631 of 2017.

If you have a query in relation to SFTR please contact:
[email protected]