The aim of the EU’s SFTR is to increase transparency and monitoring of securities financing transactions ("SFTs") including repo, reverse repo, stock loans, margin loans, liquidity swaps and collateral swaps.

Burdensome but necessary seems to be the opinion of most market participants Global Investor/ISF has spoken to over the last few months.

We quizzed securities lending market experts on the new regulation at a recent roundtable event in London.

“It is going to take lots of effort but ISLA is doing stellar work,” says John Arnesen, global head of agency lending, BNP Paribas Securities Services.

ISLA is the trade body for the securities lending industry and recently released a dedicated paper on the regulation with other financial market groups.

“The SFTR is about reporting externally and it is a necessary burden so the industry has to come together. We must all agree on a format as it has real operational implications," Arnesen adds.

“Our biggest challenge may be to agree – before the real work begins in 2017. SFTR means Agency Lending Disclosure (ALD) is dead as you cannot report the collateral tomorrow, you need it now. It is a game changer.”

Nancy Allen, director, DataLend Product Owner reckons there are still a number of unanswered questions about SFTR - including how it will work and the granularity of collateral.

“The impact of regulation has resulted in increased investment in technology,” she says.

“Technology is playing a pivotal role in the securities finance business, and firms who are ahead of the curve from a tech perspective today will be better able to handle regulatory changes.

“For example, NGT, EquiLend’s automated trading platform, frees up traders to focus on the higher intrinsic-value securities and more structured trades while providing automation for daily flow."

Fuad Ahmed, investment management executive at Phoenix Group added: “We expect the agent lender to take care of SFTR, in a similar way to derivatives regulation being implemented for us by our investment managers, but we’re very interested in its impact.”

Don D’Eramo, head of distribution and product development, securities finance, RBC Investor & Treasury Services also praised ISLA's work.

 “Industry bodies such as ISLA are doing a very good job in ensuring there is minimal impact to clients – not just around SFTR but in shaping other regulations.

“There are still some variables to be thought through regarding SFTR but overall it’s positive for the industry," D'Eramo added. "Greater transparency and stability is the target – and we should do everything we can to create a stronger market."

To find out more about SFTR requirements, click here to read an exclusive article by AIMA’sassociate director of markets regulation, Oliver Robinson, written exclusively for Global Investor/ISF.