Securities Financing Transactions Regulation (SFTR)—essentials

The following Financial Services practice 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
  • What is a financial counterparty?
  • What is a non-financial counterparty?
  • Who is exempt from the SFTR requirements?
  • The SFTR regulatory framework
  • What is the EU’s regulatory framework for SFTs?
  • More...

Securities Financing Transactions Regulation (SFTR)—essentials

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

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

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