Addressing the Reference Data Challenges of SFTR
The EU’s Securities Financing Transactions Regulation (SFTR) – designed to increase transparency around activities that are broadly categorised as shadow banking – comes into force in April 2020. As the name implies, the regulation focuses mainly around securities financing and by extension securities lending and rules around the use of collateral.
The regulation is extensive, with some 150 data fields in its mandatory regulatory reports. But alongside the kind of transaction reporting practitioners are familiar with, much of it along the lines of MiFIR and EMIR, SFTR has a strong reference data requirement.
Around a dozen of its data points require regulated firms to ensure they have access to high-quality reference and descriptive data, and the sourcing and management may prove a bridge too far for firms that otherwise have a firm grip on the rest of SFTR’s requirements.
This paper looks at SFTR’s requirements with specific focus on its reference data aspects. It discusses the challenges involved in populating key SFTR report fields that require robust reference data, and discusses how these should be dealt with.