On 30th June 2020, the European Repo and Collateral Council (ERCC) published a further update to the ICMA Recommendations for Reporting under SFTR.
The third public version published includes a number of updates resulting from the ongoing discussions in the ERCC’s SFTR Task Force. Importantly, it also incorporates the latest guidance received from ESMA on 25 May in response to some outstanding ICMA queries on the final SFTR Guidelines (initially submitted to ESMA in late January).
On the two key topics, the reporting of settlement fails and bilateral variation margining, ESMA decided unfortunately not to follow the ICMA proposals which were based on an established industry consensus and reflected in the previous recommendations. Aligning to the latest guidance therefore required extensive changes to some of the recommendations. While the current version of the Recommendations is in line with ESMA’s latest response, it is worth noting that ICMA has followed up with ESMA separately to reiterate its concerns with the guidance and to ask ESMA to reconsider. For reference, ICMA published a blackline version of the recommendations which highlights all the changes made since the previous published version (dated 22 April).
The ICMA Recommendations for Reporting under SFTR aim to help members interpret the regulatory reporting framework specified by ESMA and set out complementary best practice recommendations to provide additional clarity and address ambiguities in the official guidance.
The recommendations are complemented by additional best practice documents developed by ICMA, including a set of SFTR sample reports and an overview of lifecycle event reporting for repos. Both documents have also been updated today to reflect the changes to the recommendations.