The Securities Lending Council of the Risk Management Association is pleased to announce the release of a new standard legal agreement to address mandatory reporting obligations under Article 4 of the Securities Finance Transaction Regulation (SFTR). The SFTR Reporting Delegation Agreement (RDA) provides market participants with a comprehensive and easy-to-use template to assist in memorializing reporting services provided by agent lenders to beneficial owners. The RDA is intended to streamline the implementation of SFTR mandatory reporting and promote consistency across the securities lending market.
The Securities Finance Transaction Regulation, which takes effect for credit institutions on April 11, 2020, is meant to improve the transparency of securities financing transactions (SFTs) and identify their associated risks and magnitude.
The European Commission, which adopted the SFTR in 2015, defines SFTs as secured funding or lending transactions that imply a temporary exchange of assets with one leg of the transaction serving as a guarantee (collateral). It notes that SFTs allow banks and non-bank market participants to access secured funding/lending on a short term, thereby creating low-risk investment and financing opportunities, and are an integral element of the current financial ecosystem.
The RDA is available to all RMA members and can be found here: https://www.rmahq.org/sftr-delegated-reporting/