GTR. The Reporting Solution for Securities Financing Transactions

Transcription

1 GTR The Reporting Solution for Securities Financing Transactions

2 THE GTR SOLUTION With Europe s Securities Financing Transactions Regulation (SFTR) due to take effect in 2019, DTCC s Global Trade Repository (GTR), the industry leader in trade reporting, will provide a solution for firms SFTR reporting requirements by extending its coverage to securities financing transactions (SFTs). WHAT IS SFTR? SFTR is a European mandate that regulates SFTs with the aim of increasing transparency around and monitoring systemic risks arising from securities lending activities. SFTs are transactions that use securities to borrow cash or vice versa. SFTR requires firms to report the details of their SFTs to a trade repository (TR). SFTs covered by SFTR include repurchase agreements (repos) and reverse repos; sell/buy-back and buy/sellback transactions; securities and commodities lending and borrowing; and margin lending and borrowing. European legislators developed SFTR in response to the global Financial Stability Board s (FSB) objective of strengthening oversight and regulation of shadow banking. Legislators in other regions are expected to follow suit. The European Securities and Markets Authority (ESMA) is charged with implementing SFTR s rules and technical standards. 2

3 WHICH FIRMS ARE IN SCOPE? Both Financial Counterparties and Non-Financial Counterparties EU-based entities including their Non EU-based branches Non EU-based entities where the SFT is concluded by an EU-based branch EXAMPLES OF FIRMS THAT NEED TO REPORT Investment firms Insurance companies Pension funds Credit institutions Central counterparties (CCPs) Central Securities Depositories (CSDs) UCITS management companies and Alternative Investment Fund Managers (AIFMs) Non financial companies TRANSACTIONS COVERED BY SFTR Repo & reverse repo Securities & commodities, lending & borrowing Sell/buy-back & buy/sell-back Margin lending & borrowing 3

4 WHEN WILL REPORTING START? Reporting obligations under SFTR will be phased in, and depend on the counterparty type. It is currently expected that the reporting obligation for investment firms and credit institutions will begin in Q3 2019, subject to approval of the technical standards by the European Commission and European Parliament. JAN 2016 SFTR came in to force Q Reporting requirement apply for investment firms and credit institutions Q Reporting requirement apply for UCITS, AIFs & pension funds Q SFTR Regulatory Technical standards (RTS) excepted to be approved Q Reporting requirements for CCPs and CSDs Q Reporting for non-financial counterparties begin to apply REQUIREMENTS AT A GLANCE SFTR is structurally similar to EMIR: Similar to the requirements of European Market Infrastructure Regulation (EMIR) (counterparty data, trade data) Parties must report details of conclusion, modification & termination of any SFT to a TR by no later than T+1 Parties must also report associated collateral, as well as daily valuations Reporting obligation is dual-sided. Firms may delegate the reporting, but not the obligation Firms must ensure the completeness, timeliness and accuracy of reporting. There is a regulatory expectation that reports will be paired and matched, with very strict / no tolerance levels Backloading of open trades/positions to the repository is required Reporting counterparties (CPs) must identify themselves using legal entity identifier (LEI) Unlike EMIR, financial CP is required to report trades between financial CPs & small non-financial CPs for both sides. Small non-financial is a new classification Firms must submit in ISO XML format 4

5 COMPARISON OF EMIR, SFTR AND MIFIR REPORTING EMIR and SFTR regulations are aligned and have similar requirements EMIR SFTR (proposed) MIFIR REPORTING TYPE Trade/Position Trade/Position Transaction REGULATORY OBJECTIVE Systemic Risk Systemic Risk Market Abuse / Market Surveillance LEGAL FORM European Regulation European Regulation but SFT reporting expected to be adopted globally European Regulation but also subject to varying national implementation of the Directive NUMBER OF FIELDS UTI REQUIRED No INTER TR RECONCILIATION No DAILY VALUATION* REPORTING No DAILY COLLATERAL* REPORTING No LIFECYCLE REPORTING Partial (notional changes) ACTION TYPE REPORTING No * If modified from previous day. 5

6 USING GTR FOR SFTR COMPLIANCE GTR functionality enables SFTR reporting and data access Benefits include: A user-friendly scheduler to manage and create bespoke recurrent reports Control over user data access and selfservice capabilities Ability to query submission and trade data quickly Suite of Management Information Systems (MIS) including accepted and rejected trade details 6

7 GTR TRADE FLOW What we will offer: Reuse of existing connectivity ISO XML ingestion Support for delegated reporting 6 months of User Acceptance Testing (UAT) prior to the go-live regulation date Availability of simulator tools for testing prior to the UAT date Management of reporting through a user portal Ingestion Validation Record Keeping Reconciliation Data Access Participant Reporting Regulatory Reporting Public Reporting 7

8 GTR REPORTING MODEL We work with our client community and with regulators to build the most appropriate models to comply with regulation and user governance requirements. The robustness and safety of our infrastructure protects client data and respects the confidentiality of that data. Our utility, non-commercial model works for the interests of users and the market as a whole. Parties to the trade (brokers, banks, asset managers, corporates, etc.) Electronic execution platforms [exchanges, SEFs, OTFs, DCMs] CCPs and DCOs Confirmation Providers Intermediaries (Interdealer brokers) Custodian and asset servicers Any other middleware providers GTR EUROPE European Securities & Markets Authority (ESMA) SWITZERLAND Financial Market Supervisory Authority (FINMA) US Commodity Futures Trading Commission (CFTC) US Securities and Exchange Commission (SEC) JAPAN Japan Financial Services Agency (JFSA) SINGAPORE Monetary Authority of Singapore (MAS) AUSTRALIA Australian Securities & Investments Commision (ASIC) Pending application 2018 Pending go-live 2019 HONG KONG Hong Kong Monetary Authority (HKMA) DTCC acting as an agent for HKMA CANADA Public Dissemination OTC Derivatives Regulators Forum (ODRF) reporting 8

9 GTR IN EUROPE: KEY NUMBERS 42 3,500 30M 500M Regulators Clients New transactions weekly Messages per month GTR Europe (DDRL) The biggest trade repository in terms of reports collected from the client Millions 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Trade Repository 1 DDRL Trade Repository 2 Trade Repository 3 Trade Repository 4 Trade Repository 5 ESMA calculations based on weekly statistics provided by the trade repository - 11 January

10 PRE USER ACCEPTANCE TESTING (UAT) PHASE TO PRODUCTION Pre User Acceptance Testing (UAT) phase to Production Pre UAT Access to community industry working groups Access to online documents and videos Webinars Message specification and user interface tools UAT Access to the simulator tool Global UAT support Testing scripts UAT management information systems Production Global support Post production webinars Industry webinars Access to our Regulatory Relations team DTCC'S POST-TRADE PROCESSING SOLUTIONS FOR SFTR COMPLIANCE In addition to GTR, DTCC offers other key of post-trade solutions to help improve the quality of data required by SFTR. LEI reporting The GMEI utility, DTCC's LEI solution, provides a single, universal, standardized LEI to any eligible entity, thereby helping firms adhere to their SFTR reporting requirements. match buy/sell-back and single security bilateral repo transactions. CTM enables the enrichment of Standing Settlement Instructions for repo transactions via DTCC's ALERT service. To learn more about how DTCC can help firms manage the post-trade processing, please visit Trade matching DTCC's CTM TM platform allows repo clients to 10

11 WHY DTCC? DTCC GTR is the industry leader in trade reporting for derivatives, serving the data- and risk-management needs of more than 6,000 clients and 60 regulators across the globe through its stable, reliable infrastructure. In 2017, GTR tracked over 40 million open positions per week globally, processing over 1 billion messages monthly on some 100,000 individual entities. DTCC is a true market utility. As a userowned and -governed trade repository GTR upholds high standards of client service and collaboration, partnering with clients to enhance and expand functionality in response to changing regulatory mandates. GTR intends to extend this service for SFTR to continue to provide clients an efficient, class-leading service designed to assist clients throughout the reporting lifecycle. GTR is the only trade repository currently positioned to expand its SFT offering globally while other jurisdictions come into force, reducing implementation costs for firms operating in multi jurisdictions. GTR Europe is divided almost equally between the UK and the rest of the EU and is committed to providing trade repository services in both locations post Brexit. 6,000 clients 40M open positions per week 60 regulators accessing our data 100,000 individual entities 11

12 With over 45 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating facilities, data centers, and offices in 16 countries, DTCC, through its subsidiaries, automates, centralizes, and standardizes the post-trade processing of financial transactions, mitigating risk, increasing transparency, and driving efficiency for thousands of broker/dealers, custodian banks, and asset managers worldwide. Industry owned and governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data management, and information services across asset classes, bringing increased security and soundness to the financial markets. For more information on DTCC and our products and services, visit DTCC.com or Follow us on Find us on Check us out on Connect with us linkedin.com/company/dtcc facebook.com/thedtcc youtube.com/c/thedtcc1973 This document is for information purposes only, and does not constitute legal advice. Readers should consult their legal advisors for legal advice in connection with the matters covered in this document. The services described are governed by applicable rules, procedures, and service guides for relevant DTCC subsidiaries, which contain the full terms, conditions, and limitations applicable to the services. GTR and Global Trade Repository are brands under which, through its subsidiaries, DTCC provides regulatory reporting services for derivative transactions across multiple jurisdictions (the GTR Services ). Each DTCC subsidiary offering GTR Services is a legally separate and independent entity. Some GTR Services may only be available from certain DTCC subsidiaries.