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Securiti es Lending Market Report | June 2023

Exploring SFTR Data

Introducti on >>> Pledge Collateral

In many corners of our industry Securiti es Financing Transacti on Regulati on (SFTR) is thought of in the same
breath as other business-as-usual processes. However, aft er att ending probably hundreds of meeti ngs on this Fig 10 - REGIS-TR, KDPW, DTCC EU, DTCC UK
regulati on, like many others, it might be more appropriate to think of it as a semi-dormant volcano. That analogy
chosen because it alludes to the vast size of the topic, its ability to infl uence tectonic sized developments and, like Percentage of Collateral Reported as Pledge (EU vs UK)
those sleeping mountains, could erupt with litt le noti ce.
Over the past year we have seen some ‘relati vely’ minor changes to the validati on rules applied to submitt ed data 20.00
and, like a ground tremor, the rise and fall in expectati ons of an SFTR refi t. 18.00
16.00
In March of this year ESMA updated the market on their Data Quality Report and the use of reported data, which 14.00
includes submission under both EMIR and SFTR. The key messages in that presentati on were that key fi elds had 12.00
been identi fi ed in reported data and that those key metrics will form the foundati on for nati onal authoriti es to 10.00
supervise within each jurisdicti on. As it related to SFTR specifi cally, the message was that further and greater 8.00
6.00
scruti ny will be applied as the year progresses and that, like many other supervisory functi ons, authoriti es will use 4.00
thresholds to determine whether there should be a conversati on with the submitt er(s). From various conversati ons 2.00
with ISLA member fi rms, we understand that this increased scruti ny is under way perhaps depending on locati on. 0.00
As we move through the remainder of 2023, ISLA will be revisiti ng the list of outstanding challenges that SFTR Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23
raises, a study fi rst undertaken as a precursor to the impending SFTR refi t. With the likelihood of a refi t around the
corner and, with the recent changes to validati on rules, this is a worthwhile and valuable process. The updated list of EU UK
issues will of course be shared with regulators and supervisors.

In the following pages we will explore some potenti al trends revealed by the publicly available trade repository data In previous market reports the use of security interest From the graph, you could accidentally conclude the
and, as in previous editi ons of this report, please be mindful that the available data may not contain the full story. arrangements had shown a clear growth which, since same for EU reported acti vity. From June 2022 to June
this ti me last year has stabilised regarding UK reportable 2023, the level of this type of acti vity rose from 15.66%
transacti ons. to 17.49%.