EP has adopted in its plenary session the Regulation on reporting and transparency of securities financing transactions (SFTR) designed to improve the transparency of securities financing transactions (SFTs) in the shadow banking sector. SFTR:

  • requires reporting of all SFTs, except those concluded with central banks, to trade repositories. Firms should start reporting at different stages from 12 to 21 months after the entry into force of the relevant regulatory technical standards (RTS);
  • requires investment funds to start disclosing information on the use of SFTs and total return swaps to investors in their regular reports and in their pre-contractual documents from the entry into force of SFTR, while existing funds will have 18 months to amend them; and
  • introduces some minimum transparency conditions that should be met on the reuse of collateral, such as disclosure of the risks and the need to grant prior consent. These will apply six months after the entry into force of SFTR.

SFTR now awaits adoption by the Council, which has published an information note. It reflects EP’s adoption of the proposal and the compromise amendment and confirms that the Council should now be in a position to adopt the Regulation itself.  (Source: EP Adopts Shadow Banking Transparency Proposal and Council Information Note on SFTR)