The SFTR 鈥榡igsaw鈥� only has its corners and sides, panellist says
10 May 2019 London
Image: Shutterstock
The Securities Financing Transactions Regulation (SFTR) was compared to a jigsaw puzzle at an IHS Markit SFTR event in London.
Neil Davies, SFTR product delivery expert, securities lending, Clearstream Banking S.A., described SFTR as a 10,000 piece jigsaw puzzle, suggesting that so far the corners are in place, and the sides are about the be finished but it will take a lot of effort to complete the middle.
Using the jigsaw scenario, Davies explained that at the moment the picture on the box is a bit foggy so you can鈥檛 really tell how to fill in the picture.
He said: 鈥淭he eagerly awaited level 3 guidelines from the European Securities and Markets Authority (ESMA), plus associated updated validation rules, are currently anticipated to be the clarification needed to sharpen up the picture.鈥�
The moderator, Phil Morgan, COO of Pirum Systems, highlighted that due to the uncertainty around SFTR, Pirum has seen an uptick in clients engaging with them. He asked the panellists: 鈥淲here are you currently as an institution in relation to SFTR adherence?鈥�
Thomas Pikett, vice president, product development, J.P. Morgan agency securities lending, responded: 鈥淲e have gone through extensive analysis around requirements and field analysis knowing that there will continue to be changes as we get guidance from ESMA and best practice from the associations.鈥�
鈥淲e are planning on having some meaningful testing in the second half of this year, and we are looking to test as much as we can with our counterparties. There is still a lot of work to do but a lot of work has already been done.鈥�
Melanie Claasen, director, SFTR and European Market Infrastructure Regulation Refit, commented: 鈥淲e are trying to use new technology. We have chosen our vendors. We are in the process of scoring and accessing our TR to determine which one we are going with.鈥�
鈥淎 very important topic for us is client engagement and questionnaires. We also talked about centralised testing how can we best and efficiently cover all scenarios.鈥�
Davies cited: 鈥淲e spent quite a while on the vendor selection, though luckily as part owner of REGIS-TR we鈥檝e been spared having to also go through the TR search process.鈥�
Morgan then asked the panel what challenges, if any, as an industry we have overcome, to which Claasen replied: 鈥淲e have been working to make things more efficient. As an industry, we are all asking the same questions and we are working together to overcome them.鈥�
Claasen added: 鈥淚 don鈥檛 think the challenges have been fully overcome yet. As an industry, from a collaboration perspective, I think it has brought the industry together.鈥�
Another panellist mirrored this view in their response: 鈥淭he amount of people that are attending the working groups is really impressive and you can gain so much insight.鈥�
鈥淚t is a shared education and we are now starting to understand each other's booking practices, although nothing concrete has been achieved yet.鈥�
Neil Davies, SFTR product delivery expert, securities lending, Clearstream Banking S.A., described SFTR as a 10,000 piece jigsaw puzzle, suggesting that so far the corners are in place, and the sides are about the be finished but it will take a lot of effort to complete the middle.
Using the jigsaw scenario, Davies explained that at the moment the picture on the box is a bit foggy so you can鈥檛 really tell how to fill in the picture.
He said: 鈥淭he eagerly awaited level 3 guidelines from the European Securities and Markets Authority (ESMA), plus associated updated validation rules, are currently anticipated to be the clarification needed to sharpen up the picture.鈥�
The moderator, Phil Morgan, COO of Pirum Systems, highlighted that due to the uncertainty around SFTR, Pirum has seen an uptick in clients engaging with them. He asked the panellists: 鈥淲here are you currently as an institution in relation to SFTR adherence?鈥�
Thomas Pikett, vice president, product development, J.P. Morgan agency securities lending, responded: 鈥淲e have gone through extensive analysis around requirements and field analysis knowing that there will continue to be changes as we get guidance from ESMA and best practice from the associations.鈥�
鈥淲e are planning on having some meaningful testing in the second half of this year, and we are looking to test as much as we can with our counterparties. There is still a lot of work to do but a lot of work has already been done.鈥�
Melanie Claasen, director, SFTR and European Market Infrastructure Regulation Refit, commented: 鈥淲e are trying to use new technology. We have chosen our vendors. We are in the process of scoring and accessing our TR to determine which one we are going with.鈥�
鈥淎 very important topic for us is client engagement and questionnaires. We also talked about centralised testing how can we best and efficiently cover all scenarios.鈥�
Davies cited: 鈥淲e spent quite a while on the vendor selection, though luckily as part owner of REGIS-TR we鈥檝e been spared having to also go through the TR search process.鈥�
Morgan then asked the panel what challenges, if any, as an industry we have overcome, to which Claasen replied: 鈥淲e have been working to make things more efficient. As an industry, we are all asking the same questions and we are working together to overcome them.鈥�
Claasen added: 鈥淚 don鈥檛 think the challenges have been fully overcome yet. As an industry, from a collaboration perspective, I think it has brought the industry together.鈥�
Another panellist mirrored this view in their response: 鈥淭he amount of people that are attending the working groups is really impressive and you can gain so much insight.鈥�
鈥淚t is a shared education and we are now starting to understand each other's booking practices, although nothing concrete has been achieved yet.鈥�
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