ISLA is developing a pan-industry consensus of booking processes to overcome the as yet unfathomed regulatory reporting obstacles. The Association has held four working group meetings involving 25 member firms spanning lenders, borrowers, vendors, exchanges, and clearing agents, with the objective to determine SFTR specific Best Practice for all existing Corporate Action types:
- Agree industry booking models which enable SFTR compliant reporting.
- Develop universal procedures for processing and communicating CAs across all Securities Finance Transaction asset classes and jurisdictions.
The SFTR Corporate Actions Working Group has achieved through consensus agreement with its industry members the following:
Defining a corporate actions universe
- Formed a distinct list of all CAs, aligned with the ISO 15022 (SWIFT) and 20022 (STP) standards.
- Determined attributes and effects of each CA on SFTs.
Stratifying the corporate actions into clusters by their effects on SFTs & booking models
- Reviewed groups of CAs which can be processed similarly.
Confirmed CAs which have no material effect on SFTs.
Future meetings will move forward on the Best Practice discussions for the first cluster of corporate actions: “Full or Partial Returns”. Two further meetings per month are then planned through Q3 2019. Specific issues highlighted to date which influence the future SFTR CA discussion include:
- Unique Trade Identifier (UTI) generation for CA bookings
- Trade Timestamp (and event date) matching for CA bookings
- Fractional Rounding issue for non-cash dividends
- Non-Tradeable Securities and other ineligible stock