EquiLend has outlined its approach to simplify a complex set of securities finance reporting rules set enter into force in 2018.

The trading platform, which already collects vast amounts of securities lending data, plans to use its strengths to limit the SFTR workload for lenders and borrowers.

Short for Securities Financing Transactions Regulation, SFTR requires firms to conduct transaction reporting on repo and stock loan trades as well as all collateral held against them.

At a minimum, reporting must include the details of the parties involved in a trade, principal amount, currency, collateral assets, repo rate, lending fee, margin lending rate, haircut and maturity date. 

The data will then be sent to a trade repository, giving regulators a clearer view of the market.

EquiLend is not planning to become a trade repository itself, but it working on a solution to streamline the reporting process.

“Our unique position in the market - with existing links to market participants to our trading, market data and post-trade services - means we already capture much of the information required by SFTR,” Iain MacKay, product owner for EquiLend’s post-trade services, wrote in a statement on Monday.

“That enables us to create the unique transaction identifier (UTI) immediately either at the point of trade or during the post-trade comparison process.”

UTIs are bespoke codes designed to enable trade repositories to reconcile reported trades and are already in use for derivatives reporting under EMIR.

“As a front-to-back service provider, EquiLend is in a unique position as the best-placed provider in the securities finance industry to capture and create a UTI either at point of trade or during the post-trade comparison process, providing the simplest solution to a complex problem," MacKay added.

EquiLend also plans to provide a timestamp for all activity that clients undertake across the platform.

While the final SFTR text has not been concluded, EquiLend's experts believe the main challenge for market participants revolves around the content and timing of the reporting requirements for trades and collateral. 

The reporting requirement is dual-sided and requires the provision of a unique transaction identifier (UTI) for each trade and a legal entity identifier (LEI) for their counterparts in the trade.

"Market participants will be confronted by the need to track, manage and report a large volume of data, some of which may be captured by upstream or downstream systems, creating a potentially costly requirement to upgrade current systems or build out to external sources," MacKay said.

"EquiLend is working with industry bodies, clients, tri-party agents and TRs to provide an automated, consolidated, scalable solution that removes the necessity for manually intensive intervention from clients and provides transparency throughout the process.