Securities Financing Transactions Regulation (SFTR)—essentials
Securities Financing Transactions Regulation (SFTR)—essentials

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Securities Financing Transactions Regulation (SFTR)—essentials
  • What is the SFTR?
  • Why was the SFTR introduced?
  • What is an SFT?
  • Scope of the SFTR
  • The SFTR regulatory framework
  • Key requirements of the SFTR
  • Reporting SFTs to trade repositories
  • Transparency towards investors
  • Disclosures and consent for reuse
  • more

BREXIT: The UK is leaving the EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For further guidance on the impact of Brexit on the SFTR, please see Practice Note: Preparing for Brexit: SFTR—quick guide.

What is the SFTR?

The Regulation on reporting and transparency of securities financing transactions (SFTR) (Regulation (EU) 2015/2365) requires all securities financing transactions (SFTs) to be reported to trade repositories, places additional reporting requirements on investment managers and introduces the need for prior risk disclosures and written consent before assets are reused. This Practice Note explores the key elements of the SFTR and acts as a general introduction to its requirements.

The European Commission published a legislative proposal (2014/0017(COD)) for the SFTR in January 2014. On 29 October 2015, the European Parliament adopted the legislative proposal and on 16 November 2015, the European Council adopted the SFTR without discussion. It entered into force on the 20th day (12 January 2016, subject to various transitional periods set out below) following its publication in the EU Official Journal on 23 December 2015.

Why was the SFTR introduced?

The aim of the SFTR was to increase the transparency of SFTs, a priority area identified by the European Commission in its 2013 ‘Communication on Shadow Banking’. The European Commission