Complex reporting requirements under the EU's Securities Finance Transactions Regulation (SFTR) can be broken down into two main components, according to experts at Pirum.
The post-trade technology vendor, which specialises in securities finance, already handles large amounts of lending and borrowing data and is currently building solutions for market participants to comply with SFTR.
The EU regulation will force firms to report details of their securities financing transactions (SFTs) to trade repositories from mid-2018 for the benefit of regulators.
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.
It is envisaged that the detailed information will need to be reported on each SFT. Firms have the option of using a third party to do this.
"The first component involves collecting and collating the data necessary for reporting, often from multiple source systems, into a single report," Pirum's chief operating officer, Ben Challice, told Global Investor/ISF.
"The second is the matching of positions between counterparties in order to generate and apply the correct UTIs as part of that reporting."
By participating in contract comparison and other post-trade automation on Pirum’s platform, Challice says that clients are already submitting files containing many of the data points required for the SFTR reporting.
As part of the comparison process Pirum is then matching positions received separately from each counterparty, effectively replicating what the trade repositories will be looking to do when they receive the data.
"Recognising these synergies, Pirum will be building a regulatory reporting solution allowing clients to further utilise their existing file feeds by creating the SFT reports to be submitted to the TRs on their behalf, avoiding the potentially high costs often associated with an internal build," Challice adds.
"As regulatory reporting brings in no additional revenue for market participants, complying with the requirement is a pure cost to the participants.
"By building a solution that can be used across the market Pirum will be able to minimise the overall cost to each firm, and therefore the industry, of achieving that compliance while at the same time ensuring the reporting is of a high-quality being based on matched and reconciled data."