SFTR Delegated Reporting Agreement: What You Need to Know
The Securities Financing Transaction Regulation (SFTR) is a set of regulations aimed at providing transparency in security financing transactions. As part of SFTR, firms must report their transactions to trade repositories, known as trade reporting. However, in certain cases, firms may delegate the reporting responsibility to their counterparties.
This is where the SFTR Delegated Reporting Agreement comes in. It is a legal agreement between two parties that outlines the responsibilities and obligations related to delegated reporting under SFTR. This agreement helps firms ensure compliance with SFTR regulations while also providing clarity on who is responsible for reporting.
What is Delegated Reporting?
Delegated reporting is a process in which one firm delegates the responsibility of reporting their SFTR transactions to their counterparty. This can occur when one party in a transaction is better equipped to handle the reporting process or when one party is required to report on behalf of the other.
In delegated reporting, the reporting firm (the counterparty) is responsible for submitting transaction reports to the trade repository on behalf of the non-reporting firm. However, both parties are still responsible for ensuring the accuracy and completeness of the reported data.
What Should be Included in the SFTR Delegated Reporting Agreement?
The SFTR Delegated Reporting Agreement should outline the roles and responsibilities of each party involved in delegated reporting. It should also include the following:
– Details of the parties involved in the agreement, including their contact information and legal status.
– The scope of the delegated reporting, including which transactions will be reported and by whom.
– Deadlines for reporting and submission of data.
– Details on the accuracy and completeness of the data, including any data quality controls.
– The process for managing errors or omissions in reported data.
– Details on the fees and costs associated with delegated reporting.
– Confidentiality and data protection measures.
Why is the SFTR Delegated Reporting Agreement Important?
The SFTR Delegated Reporting Agreement is crucial in ensuring compliance with SFTR regulations. Delegated reporting allows firms to reduce their reporting burden while ensuring accurate and complete reporting.
Having a clear and well-defined delegated reporting agreement helps firms avoid misunderstandings and disputes related to reporting responsibilities. This can help firms avoid penalties and reputational damage associated with non-compliance.
In conclusion, the SFTR Delegated Reporting Agreement is an important tool for firms engaging in delegated reporting under SFTR. It helps ensure compliance with regulations while providing clarity on reporting responsibilities. Firms should ensure that their delegated reporting agreements are well-defined and comprehensive to avoid potential disputes and penalties.