SFTR EU & UK

SFTR — the Securities Financing Transactions Regulation — is the European Union’s framework for transparency in the securities financing markets, established under Regulation (EU) 2015/2365. Developed in response to Financial Stability Board recommendations following the 2008 financial crisis and a subsequent review of shadow banking risks, SFTR brings the same post-trade reporting discipline applied to derivatives under EMIR to a class of transactions that had previously operated with limited regulatory visibility: repos, securities lending, margin lending, and buy-sell backs.

Under SFTR, both financial and non-financial counterparties are required to report the details of every securities financing transaction to an authorised Trade Repository (TR) no later than the working day following conclusion, modification, or termination of the transaction. The reporting framework is deliberately granular — covering not just the economic terms of the transaction but also the composition of collateral, whether that collateral is available for reuse or has been reused, end-of-day collateral substitution, and haircuts applied. This level of detail gives regulators a real-time picture of collateral flows, liquidity concentrations, and interconnected exposures across the financial system.

Key Obligations

• Dual-sided reporting — both counterparties to an SFT must report their side of the transaction; where one counterparty reports on behalf of both by prior arrangement, the report must indicate this explicitly, and delegated reporting to a third-party service provider is permitted
• Four reporting tables — each SFT generates reports across the counterparty data table, the loan and collateral table, the margin data table, and the reuse data table; all four must be populated accurately and consistently
• Unique Transaction Identifier (UTI) — every SFT must carry a UTI to enable matching and reconciliation between counterparties and across trade repositories
• Legal Entity Identifier (LEI) — all reporting entities, counterparties, and issuers of collateral securities must hold a valid, renewed LEI; collateral issuer LEI requirements have been a persistent source of data quality failures under both EU and UK SFTR
• Collateral and reuse reporting — counterparties must report the composition of collateral at ISIN level, availability for reuse, actual reuse volumes, and end-of-day substitution, providing regulators with granular insight into collateral chains and rehypothecation risk
• Lifecycle event reporting — any modification, rate change, collateral update, partial termination, novation, or full termination must be reported with the correct action type on the day of occurrence
• Daily margin reporting — where margin is posted or received in connection with an SFT, margin data must be reported on a daily basis for the life of the transaction

EU SFTR and UK SFTR

Following Brexit, the regime operates as two parallel but substantively aligned frameworks. EU SFTR, supervised by ESMA, covers counterparties established in the European Economic Area — including EU branches of third-country firms. UK SFTR, onshored into UK law and supervised by the FCA (with the Bank of England overseeing CCPs and CSDs), covers UK-established counterparties and UK branches of third-country financial firms. A material divergence exists in counterparty scope: the UK elected not to onshore the non-financial counterparty (NFC) reporting obligation, meaning UK NFCs are not in scope of UK SFTR. Firms active in both jurisdictions may face dual reporting obligations and must submit to separate, jurisdiction-specific trade repositories.

ESMA updated EU SFTR validation rules in September 2023, and the FCA published final updates to UK SFTR validation rules and XML schemas that went live on 25 November 2024, addressing accumulated data quality issues and responding to industry feedback on schema consistency.

Point Nine’s platform supports both EU SFTR and UK SFTR, with automated field mapping across all four reporting tables, pre-submission validation against the respective rule sets, and direct connectivity to authorised trade repositories in both jurisdictions.