Capital Markets Union (CMU) •EU capital markets are global •Considerable progress has been made •But inefficiencies, legal barriers, insufficient competition remain. •Markets need to work better for the economy, delivering growth and jobs.

1. Jennifer Robertson
Deputy Head of Unit
DG FISMA– Unit C2 Market Infrastructures
European Commission
The transparency of securities
financing transactions in the EU
10 September 2015

2. Capital Markets Union (CMU)
• EU capital markets are global
• Considerable progress has been made
• But inefficiencies, legal barriers, insufficient
competition remain.
• Markets need to work better for the
economy, delivering growth and jobs.

3. SFTR: what is it trying to achieve?
• Regulatory gaps, ineffective supervision,
opaque markets and overly-complex
products
• Need to improve the monitoring and
regulation of the 'shadow banking' sector
• Work has been undertaken at the
international and EU level

4. Objective: more transparency
Transparency
of
reuse
Reporting of
SFTs
to trade
repositories
Investment
fund's
transparency

5. A. The reporting of SFTs to trade
repositories

6. Reporting of SFT to trade repositories
• Lack of data available for effective
monitoring of the systemic risk linked to
the security financing transactions
• Financial Stability Board (FSB) Policy
framework for Adressing Shadow Banking
Risks in Securities Lending and Repos ->
Recommendation 2
• ESRB Ocassional paper n°2, March 2013

7. Building on EMIR framework but some
differences
• Reporting to trade repositories
• Reporting of transactions data
• All counterparties shall report (financial and non-
financial):
• But for certain non-financial firms, the financial
counterparty will be responsible for reporting
• Debt management agencies are exempted from
reporting
• All transactions with central banks are exempted

8. What should be reported?
• Repurchase transactions
• Securities or commodities lending and borrowing
• Buy-sell back transactions + sell-buy back
transactions
• Margin lending transactions
Details to be reported to be developed by ESMA in
cooperation with the ESCB.

9. Timing
• Entry into force of SFTR (date = T)
• Development of technical standards (T+12
months)
• Adoption of technical standards (T +/- 18
months)
• Date of application: +/- mid-2017
• Phased in application over approx.
2018/2019.

10. Trade repositories
• Based on EMIR framework
• Some variations compared to EMIR:
• TRs need to have procedures to verify the completeness and
correctness of details reported
• Enlarged list of entities that can access the data reported.
• Provision for a simplified registration procedure for
TRs already registered under EMIR.

11. B. The disclosure of SFTs by
invesment funds

12. Investment fund disclosures to investors
• FSB Recommendation 5: review fund's manager's
reporting of SFTs
• Include information in 1/2 yearly or Annual reports
• Specific information described in the Annex
• Dates of application:
• Half yearly and annual reports (12 months after entry
into force)
• Pre-investment documents:
• immediately (for new funds)
• + 18 months (for existing funds)

13. C. The transparency of reuse

14. The transparency of reuse
• More transparent use of reuse;
• The counterparty providing the collateral must be
informed of the risks and consequences of in writing;
• The counterparty providing the collateral must give its
express consent;
• When reuse occurs, the collateral shall be transferred
from the account of the providing counterparty.

15. Important step in improving transparency of
SFTs and reuse
 Will ensure access by regulators to granular data on
SFTs
 Will allow counterparties to be fully aware of the reuse
of their collateral
 Will ensure funds investors get more transparency on
SFTs

16. Thank you
Jennifer.Robertson@ec.europa.eu