Read our news updates on the UK Securities Financing Transactions Regulation (UK SFTR).
October 2023
Updated UK SFTR Validation Rules and XML Schemas
On 1 August 2023, we published draft UK SFTR Validation Rules and XML schemas to support the ongoing reporting of securities financing transactions under UK SFTR and invited comments from stakeholders. The amendments are in response to industry feedback and to address data quality issues. We have considered the feedback we received and made minor amendments to the draft versions where appropriate. A description of the amendments we have made can be found in the 'changes' tab of the final UK SFTR Validation Rules.
We have now published final versions of the UK SFTR Validation Rules and XML schemas on our UK SFTR reporting webpage[1].
The changes to the Validation Rules and XML schemas will be applicable from 25 November 2024.
New UK SFTR Errors and Omissions Form
On 23 October 2023, we published a new UK SFTR Errors and Omissions Form. Going forward, we request that firms use the new form to notify the FCA about any errors or omissions in their securities financing transaction reports pursuant to Article 4 of UK SFTR. We expect firms to notify as soon as practicably possible following identification of any errors and/or omissions with their UK SFTR reporting.
The new form can be found on the UK SFTR reporting webpage[1]. Please follow this link[2] to the new form.
August 2023
Updated UK SFTR Validation Rules and XML Schemas
On 1 August 2023, we published draft amendments to the Validation Rules and XML schemas to support the ongoing reporting of securities financing transactions under the UK Securities Financing Transactions Regulation (UK SFTR). The amendments are in response to industry feedback and to address data quality issues.
We invite comments on both documents from all relevant stakeholders by 15 September 2023. Feedback should be sent to [email protected]. We will consider all feedback received and publish final versions shortly thereafter.
To allow firms adequate time to make the relevant systems updates we are proposing a go-live date for the amended Validation Rules and XML schemas to take effect on 4 November 2024.
Draft UK SFTR Validation rules[3] (applicable from 4 November 2024).
Draft XML Schemas under UK SFTR (applicable from 4 November 2024).
October 2022
Reporting Legal Entity Identifiers (LEIs) of third country issuers under UK SFTR
In March 2022, we extended a period of forbearance for the reporting of LEIs of third country issuers under UK SFTR. This was put in place to reduce potential market disruption resulting from the large number of third country issuers without an LEI. This forbearance is due to expire on 13 October 2022.
Industry has made some progress in wider LEI coverage, however, many third country issuers still have not acquired an LEI. This may impact reporting under UK SFTR after 13 October 2022. Our analysis of UK SFTR data shows that currently, where the security was issued in a third country jurisdiction, 29% of loaned security transaction records were not reported with an issuer LEI.
In recognition of this, we will not prioritise supervisory action in relation to the reporting of LEIs of third country issuers.
We will continue to monitor the evolution of the issuance of LEIs for third country issuers, the population of the field ‘LEI of the issuer’ for third country issuers, and the structural evolution of SFT markets in the UK and abroad, to continually assess developments in the use of LEIs of third country issuers. We will provide at least six months’ notice to industry should our position change.
We remain committed to the widespread adoption of LEIs. Those responsible should report an LEI for third country issuers where one is available and continue to engage with third country issuers to encourage them to acquire an LEI where one is not.
March 2022
Reporting Legal Entity Identifiers (LEIs) of non-EEA third country issuers under UK SFTR
In April 2021, we extended a period of forbearance for the reporting of LEIs of non-EEA third country issuers under UK SFTR. This was put in place to reduce potential market disruption resulting from the large number of non-EEA third country issuers without a LEI. This forbearance is due to expire on 13 April 2022.
Whilst industry has made further progress in wider LEI coverage, we are aware that many non-EEA third country issuers have still not acquired a LEI which may impact reporting under UK SFTR after 13 April 2022.
In recognition of this, we are extending the period during which reports under UK SFTR without the LEI of a non-EEA third country issuer will be accepted until 13 October 2022.
Reporting counterparties should report a LEI for non-EEA third country issuers where one is available and continue engaging with non-EEA third country issuers to encourage them to acquire a LEI if not.
March 2022
Reporting of SFTs with members of the European System of Central Banks (ESCB)
The Temporary Transitional Power (TTP[6]) has been in effect since the end of the transition period and was applied in the case of the UK SFTR to securities financing transactions (SFTs).
For transactions where one of the counterparties is a member of the European System of Central Banks (ESCB)[7], the status quo was retained, and financial counterparties did not need to report these transactions under UK SFTR for the duration of the TTP.
The TTP will expire, for these purposes, on 31 March 2022. Once the TTP expires, UK counterparties subject to UK SFTR requirements will be required to report these transactions under UK SFTR.
We expect firms to review their reporting systems and make the necessary changes to ensure that any new and outstanding SFTs with members of the ESCB are reported as soon as possible after 1 April 2022. To avoid duplicative reporting, from 1 April 2022, SFTs will no longer be reportable under UK MiFIR (see chapter 3 relating to the Technical Standards (Markets in Financial Instruments) (Transaction Reporting) Instrument 2022 in Handbook Notice No. 96[8]).
October 2021
Updated UK SFTR validation rules
On 14 October 2021, we published an update to the UK SFTR validation rules,[9] to further facilitate reporting by firms following the end of the transition period. These amendments will apply from 11 April 2022.
Firms should continue to use existing UK SFTR validation rules[10] until that date. Please note the amendments to the UK SFTR validation rules coming into effect on 11 April 2022 are marked in red.
April 2021
Reporting Legal Entity Identifiers (LEIs) of non-EEA third country issuers under UK SFTR
Under Article 4 UK SFTR, reporting counterparties must use LEIs to identify entities when submitting transaction reports under UK SFTR.
In January 2020, ESMA granted 12 months of forbearance[11] from the entry into force of SFTR reporting requirements in relation to the reporting of LEIs of non-EEA third country issuers under the reporting technical standard[12]. While the industry has made progress in encouraging more widespread LEI coverage among non-EEA third country issuers, we recognise that there are still many non-EEA third country issuers without a LEI.
To reduce market disruption, we are extending the period during which reports under UK SFTR without the LEI of a non-EEA third country issuer will be accepted until at least 13 April 2022. In the meantime, we expect reporting counterparties to continue engaging with non-EEA third country issuers to acquire a LEI. We also expect reporting counterparties to report a LEI for non-EEA third country issuers where available.
March 2021
Approach to reporting references to LIBOR in securities financing transactions under UK SFTR
For UK SFTR reporting, it’s essential that the UK SFTR transaction data accurately reflects the details of the transaction.
Under Article 4 UK SFTR, counterparties to SFTs must report any modification of an SFT they have concluded to a registered or recognised trade repository no later than the working day following the modification of the transaction.
If the terms of a securities financing transaction say that, either immediately or at some other point in time, an alternative rate applies in the place of LIBOR, this would bring about a modification that is reportable under UK SFTR. We would expect this modification to be reported at the time that the alternative rate takes effect. This applies to all agreed terms that result in an alternative rate applying in place of LIBOR.
While we expect you to make the necessary preparations to ensure the relevant UK SFTR reports are updated in a timely manner, we will apply our supervisory powers for this requirement in a proportionate and risk-based manner.