FCA to exclude all SFTs from reporting under UK MiFIR

SFTs are excluded from reporting under the UK Markets in Financial Instruments Regulation (UK MiFIR) following the exclusion provided for in Article 2(5)(a) of RTS 22, as onshored. However, this exclusion does not apply to SFTs to which the counterparty is a member of the ESCB or the Bank of England.

SFTs to which a member of the ESCB is a counterparty are also reportable under the UK Securities Financing Transaction Regulation (UK SFTR). However, as a result of an exercise of the Temporary Transitional Power (TTP) by the FCA, this reporting obligation did not come into effect in January 2021.

The TTP direction affecting the UK SFTR reporting obligation is set to expire at the end of March 2022. In the absence of any action, SFTs to which the counterparty is a member of the ESCB would become reportable under UK SFTR and remain reportable under UK MiFIR.

FCA Handbook Notice 96 is available at https://www.fca.org.uk/publication/fca/handbook-notice-96.pdf

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