Exclusive: Delta Capita forms SFTR testing consortium
08 May 2019 London
Image: Shutterstock
Delta Capita has formed an industry working group to mutualise the costs of preparing for the Securities Financing Transactions Regulation (SFTR).
As part of the preparations, Delta Capita held various workshops involving 50 repo, stock lending and testing experts to agree on a strategy for SFTR testing.
The working group includes prime brokers and agent lenders and is in active discussions with the industry trade associations, service providers and trade repositories.
The first phase of preparations is to create a standardised test pack for user acceptance testing (UAT) covering 227 SFTR trade scenarios and 54 lifecycle events.
The next phase is to deploy the test pack to help coordinate industry-wide testing.
Commenting on the new testing group, David Field, head of the securities finance practice at Delta Capita said: 鈥淭he test pack will provide full traceability to the regulatory technical standards (RTS)/implementing technical standards (ITS), European Securities and Markets Authority guidance and industry best practices across repo, buy/sell back, stock borrow/loan and margin lending.鈥�
Field added: 鈥淚t will provide users with the test data, test scripts and expected results they need to conduct their UAT and to test with their counterparts, trading venues, service providers, central counterparties, triparty agents and trade repositories. Consortium members will be able to benchmark their testing run rates and pass rates to highlight areas of concern for review and remediation.鈥�
Joe Channer, chief executive at Delta Capita, added: 鈥淥ne of the lessons the industry has learnt
from European Market Infrastructure Regulation is the need for both efficient testing within firms and industry level co-ordinated testing. With complex industry practices such as collateral treatment, life-cycle events and changes to disclosure mechanisms, the industry sees value in a robust, independent testing regime.鈥�
The working group got the backing of the International Securities Lending Association鈥檚 CEO Andy Dyson, who said: 鈥淚SLA will support this initiative and work with it wherever we can.鈥�
As part of the preparations, Delta Capita held various workshops involving 50 repo, stock lending and testing experts to agree on a strategy for SFTR testing.
The working group includes prime brokers and agent lenders and is in active discussions with the industry trade associations, service providers and trade repositories.
The first phase of preparations is to create a standardised test pack for user acceptance testing (UAT) covering 227 SFTR trade scenarios and 54 lifecycle events.
The next phase is to deploy the test pack to help coordinate industry-wide testing.
Commenting on the new testing group, David Field, head of the securities finance practice at Delta Capita said: 鈥淭he test pack will provide full traceability to the regulatory technical standards (RTS)/implementing technical standards (ITS), European Securities and Markets Authority guidance and industry best practices across repo, buy/sell back, stock borrow/loan and margin lending.鈥�
Field added: 鈥淚t will provide users with the test data, test scripts and expected results they need to conduct their UAT and to test with their counterparts, trading venues, service providers, central counterparties, triparty agents and trade repositories. Consortium members will be able to benchmark their testing run rates and pass rates to highlight areas of concern for review and remediation.鈥�
Joe Channer, chief executive at Delta Capita, added: 鈥淥ne of the lessons the industry has learnt
from European Market Infrastructure Regulation is the need for both efficient testing within firms and industry level co-ordinated testing. With complex industry practices such as collateral treatment, life-cycle events and changes to disclosure mechanisms, the industry sees value in a robust, independent testing regime.鈥�
The working group got the backing of the International Securities Lending Association鈥檚 CEO Andy Dyson, who said: 鈥淚SLA will support this initiative and work with it wherever we can.鈥�
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