Securities Financing: Reuse Obligations Become Effective

The Securities Financing Transactions Regulation (EU 2015/2365) (the “SFTR” or the “Regulation”) forms part of the EU initiative on shadow banking and is intended to assist in bringing more transparency to shadow banking activities. The EU Commission, in a factsheet published in October 2015, stated that the shadow banking sector should be better monitored in light of its size, its close links to the regulated financial sector and the systemic risks that it may pose. The Commission identified the reduction of risk associated with securities financing transactions (“SFTs”) and increasing transparency as priorities which the introduction of the SFT aims to address and regulators, including ESMA, will be provided with access to detailed, reliable and comprehensive data for the ongoing monitoring of risk in the sector.


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