As the world deals with the Covid-19 virus, SFTR is set to go live with its first phase on April 13th in the EU. However, due to shutdowns across Europe and difficulties preparing for the regulation, banks and industry associations have approached ESMA about postponing the start of SFTR.
Today, ESMA has a public statement on the matter (link). Acknowledging that Covid-19 presents a challenge to trade repositories, counterparties and reporting entities to meet the April 13th deadline, ESMA stated that it “expects competent authorities not to prioritise their supervisory actions” towards SFTR from April 13th until July 13th (the second phase of the regulation).
ESMA added that they don’t consider it necessary to register any trade repositories before April 13th. This would provide repositories with more time to prepare for handling report submissions. ESMA also explained that they themselves aren’t able to record report details. However, they did explain that they expect trade repositories to be fully registered by the July 13th, 2020 date when CCPs and CSDs fall under scope along with credit institutions and investment firms that were included for Phase 1.
As a result, ESMA has put in place a de-facto postponement of SFTR. Rather than push off the official go-live date, they are indicating to national competent authorities (NCAs) that neither ESMA or trade repositories will be ready by April 13th to receive report submissions.
The next step will be to see how any NCAs react to ESMA’s opinion. While ESMA is tasked with supervising SFTR, it’s the NCAs that are ultimately responsible for enforcing it in their jurisdictions.
It’s worth noting that even with ESMA’s statement, they still indicated that they expect firms falling under scope on April 13 to continue to be preparing for SFTR and ready to report as soon as repositories are approved. This could take place even before the July 13th period.
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