NEX Regulatory Reporting is to apply to become a trade repository for the Securities Financing Transactions Regulation (SFTR) and launch a dedicated reporting solution, pending the issuance of the final technical standards from ESMA.
NEX Regulatory Reporting will in time add the SFTR trade repository and solution to its Global Reporting Hub to provide clients with an end-to-end solution for the securities lending and repo markets. The SFTR trade repository will be built and hosted in the cloud to ensure client data is processed and stored in a highly secure and robust environment.
Leveraging the NEX portfolio of services, NEX Regulatory Reporting will connect to the BrokerTec and ENSO platforms so that clients can automatically transfer their transaction data to the SFTR trade repository. The BrokerTec EU repo platform currently processes 10,000 repo trades per day with a total nominal trading volume of EUR250 billion, for over 90 clients, while the ENSO platform services over 100 hedge fund and asset management clients and has USD1 trillion in client assets under advisory.
Ken Pigaga, CEO of NEX Optimisation, says: “While we await the final technical standards from ESMA, we have begun to put the building blocks in place for an SFTR solution and trade repository which will not only support our existing client base within NEX, but also the wider securities lending and repo markets. It’s important that service providers and clients alike begin to prepare for the impending regulation now, to avoid the last-minute rush for compliance that many in the market are currently experiencing ahead of MiFID II.”
Collin Coleman (pictured), Head of NEX Regulatory Reporting, says: “While most markets are used to a degree of regulatory reporting under EMIR, MiFID I and in now preparing for MiFID II, securities lending has to date been an unregulated market and so the introduction of SFTR will impact many global and regional banks and the buy side. Pending detail on the regulatory technical standards, we look forward to launching a complete SFTR solution and providing direct reporting access to NEX’s BrokerTec and ENSO clients.”
Intended to provide transparency and oversight on the use of securities financing transactions in the multi-trillion Repo and securities lending markets, SFTR will require financial and non-financial counterparties to report transactions to an authorised trade repository. Initially due to come into effect in Q4 2017 with a nine-month phase in period, the market anticipates that SFTR will come into effect during Q2 2019. Currently in review with the European Commission, ESMA is expected to release the final draft technical standards within the coming months.
