The Regulation (EU) 2015/2365 on transparency of securities financing transactions and of reuse ("SFTR", the "Regulation") came into force on 12 January 2016, with some aspects coming into effect later. If any of your funds use repos, reverse repos, engage in securities lending, margin lending or use total return swaps, this will impact your business. A link to the Regulation is available here.
Key elements of the Regulation:
Overview: SFTR aims to enhance transparency in relation to the use of securities financing transactions ("SFTs") by introducing a range of transparency obligations that must be met by institutions engaging in SFTs.
Transactions in scope: SFTs (securities lending, repurchase agreements, reverse repurchase agreements and certain margin lending transactions) and total return swaps ("TRS"). The collateral reuse requirements under SFTR apply to the reuse of financial instruments provided as collateral under all security and title transfer collateral arrangements.
Entities in scope: Any EU financial or non-financial institution including both authorised UCITS and authorised AIFs.
Click here to view the table.
*It is still unclear whether this applies only to new fund ranges or captures new sub-funds of existing umbrella funds also. We consider it should only apply to new fund ranges but we are waiting for Central Bank/ESMA clarification on this point. It is also unclear whether the relevant date may be the date it is registered/incorporated or the date of authorisation by the Central Bank.