Reporting
Any EU financial or non-financial entity will be required to report. This includes banks, brokers, funds, insurance companies, pension funds, other financing companies and non-financial companies.
The European System of Central Banks, the Bank for International Settlements and public bodies managing public debt are exempted from reporting in order not to jeopardise their discretionary policies.[3]
To minimise the compliance burden for the industry, ESMA was asked to achieve consistency with the reporting already required under the European Markets Infrastructure Regulation (EMIR) for derivatives.
The reports shall contain the composition of the collateral used in a SFT, whether that collateral is available for re-use and has been re-used, or whether any haircuts have been applied to it.
The rules are deployed in four phases: i) banks and broker-dealers (11 April 2020), ii) financial markets infrastructures (11 July 2020), iii) insurers and asset managers (11 October 2020) and iv) non-financial entities (11 January 2021).[4]
To support firms’ implementation, ESMA produced draft guidelines, setting out guidance on how to fill the main field and including base scenarios.
They cover seven aspects of the reporting requirements, including the number of reportable SFTs, how to link SFT collateral with SFT loans, or how to reconcile breaks or rejections between counterparties.[5]