STFR inspires firms to consolidate processes for regulatory reporting regimes, say IHS Markit and Pirum

A new survey of 80+ in-scope firms by IHS Markit and Pirum shows that more than 70 percent of respondents are aiming to consolidate their diverse regulatory reporting processes under a single platform following the implementation of the Securities Financing Transaction Regulation (SFTR). Fifty-four percent of surveyed firms also say they have used the SFTR implementation as a catalyst for rethinking their regulatory reporting processes for various regimes, including the Markets in Financial Instruments Directive (MiFID) and European Market Infrastructure Regulation (EMIR). 

Based on overall survey feedback from market participants, IHS Markit believes that SFTR will likely serve as a model for future regulatory reporting requirements. Looking ahead, firms anticipate lengthy consultation periods on new and amended regulations, more prescribed data standards and validation rules, as well as the prospect of additional reporting requirements. Seventy-nine percent of respondents acknowledged that they have additional reporting requirements since SFTR went live. 

Key survey insights include: 

Brexit Transition – 90 per cent say that Brexit had a limited impact on their securities financing transactions due to proactive planning which ensured trades can be split for UK and EU reporting requirements. 

Success of Technology – 87 per cent say they are currently experiencing little to no challenges following SFTR implementation. 

Implementation Preparedness – 67 per cent were fully or almost ready with a complete SFTR solution at the time of go-live, while only 10 per cent were completely unprepared. 

Unique Transaction Identifiers (UTI) Pairing – 80 per cent indicated they have been able to successfully pair all or most UTIs, compared with only 28 per cent who are satisfied with their current UTI pairing efforts for EMIR several years post-implementation. 

SFTR Reporting Collateral – 45 per cent say they are successfully reporting collateral to trade repositories, while 28 percent are experiencing moderate challenges and 27 per cent have significant challenges. 

Data Sourcing – 78 per cent have overcome most challenges on sourcing the correct data from their internal/upstream systems and are receiving high rates of acknowledged (ACK) messages from trade repositories. 

Alignment of Lifecycle Events – 73 per cent have overcome most challenges with lifecycle processes, while 27 per cent say they are still struggling to manage them. Process automation, UTI pairing at trade repositories and data matching are noted as key drivers of alignment. 

Delegated Reporting – 70 per cent of sellside firms surveyed say they currently or plan to offer delegated reporting to their clients. 

Repository Reconciliations – Almost 50 per cent are currently focusing efforts on improving reconciliations and the resolution of reconciliation breaks between trade repositories. 

Pierre Khemdoudi, SVP of Equities and Regulatory Reporting at IHS Markit, says: “It is clear that while the implementation of SFTR was complex in many ways, market participants rose to the occasion and successfully navigated challenges through innovation. As firms recognize the value of streamlined reporting and the need for data harmonisation, there is a strong opportunity to leverage enhanced analytics for greater insights on transactions.”  

With over two decades of expertise in trade and transaction reporting, IHS Markit is a world-leading provider of RegTech solutions for banks, brokers, hedge funds, asset managers, insurance companies and corporates. IHS Markit serves more than 400 firms in monitoring multi-jurisdiction reporting for MIFID, EMIR, SFTR, ASIC, MAS, CFTC, SEC and other global reporting regimes.