COVID-19 | SFTR Reporting

Evelyn MaherPartner, Bonn Steichen & Partners

Background

On 9 April 2020, the CSSF published Circular 20/739 on the application of the “Guidelines on the Reporting under Articles 4 and 12 Securities Financing Transactions Regulation” (hereafter “SFTR”), which were published on 6 January 2020 by the European Securities and Markets Authority (“ESMA”).

The circular confirms that the CSSF will follow ESMA’s guidelines on SFT reporting.

The circular is addressed to (i) all entities subject to the supervision of the CSSF as well as to (ii) non-financial counterparties as defined in Article 3(4) of SFTR as soon as the entities mentioned under points (i) and (ii) enter into a securities financing transaction (hereafter “SFT”) as defined in Article 3(11) of SFTR.

The counterparties should comply with their reporting obligation to the trade repository no later than the working day following the conclusion, modification or termination of the transaction.

The reporting shall effectively start on the following dates:

  • Tuesday, 14 April 2020 for authorised investment firms and credit institutions (referred to under Article 33(2)(a)(i) of SFTR);
  • Monday, 13 July 2020 for authorised central counterparty and central securities depository (referred to under Article 33(2)(a)(ii) of SFTR);
  • Monday, 12 October 2020 for (i) an authorised insurance undertaking or a reinsurance undertaking, (ii) authorised UCITS and, where relevant, its management company, (iii) authorised AIF managed by AIFMs, (iv) an authorised or registered institution for occupational retirement provision (referred to under Article 33(2)(a)(iii) of SFTR); and
  • Monday, 11 January 2021 for non-financial counterparties, i.e. undertakings established in the European Union or in a third country other than the entities referred to above (referred to under Article 33(2)(a)(iv) of SFTR).

SFTR Implementation

In the context of Covid-19, the SFT reporting implementation is heavily impacted by the pandemic.

Based on the considerations described in the ESMA statement of 26 March 2020, and taking into account the fact that the concerned entities face serious difficulties in finalising the implementation of the SFT reporting requirements and in completing the necessary technical set-up before 14 April 2020, the CSSF decided that it will not prioritise its supervisory actions towards counterparties, entities responsible for reporting and investment firms in respect of their reporting obligations pursuant to SFTR or MiFIR, regarding (i) SFTs concluded between 13 April 2020 and 13 July 2020, and (ii) SFTs subject to backloading under SFTR.

However, please note that the CSSF expects the concerned entities to be sufficiently prepared ahead of the next phase of the reporting regime, i.e. 13 July 2020 in order to start reporting as of this date.