The Securities Financing Transactions Regulation (SFTR), Regulation (EU) 2015/2365, requires EU counterparties to report repos, securities lending, buy-sell-backs and margin lending to a trade repository by the working day after trade. It also sets disclosure rules for funds using these transactions and conditions for the reuse of collateral.
Repo (Repurchase agreement)A repurchase agreement (repo) is a sale of securities together with an agreement to buy them back at a set price on a later date. Economically it is a secured loan: the seller borrows cash, the buyer lends it and holds the securities as collateral, with the price difference representing the repo rate.
Securities lendingSecurities lending is the temporary transfer of securities from a lender, often a fund or pension scheme, to a borrower that returns equivalent securities later and pays a fee. The borrower gives collateral (cash or securities) above the loan value; lenders keep the economic benefit of income through manufactured payments.
Trade repositoryA trade repository is an entity that centrally collects and keeps records of derivatives or securities financing transactions reported by market participants, and gives regulators access to them. In the EU trade repositories are registered and supervised by the European Securities and Markets Authority (ESMA) under EMIR (derivatives) and SFTR (securities financing).
UTI (Unique transaction identifier)The unique transaction identifier (UTI) is a code, defined by ISO 23897, that identifies one reported derivative or securities financing transaction so both counterparties report it under the same reference. Rules decide which party generates the UTI and shares it in time for reporting.
Rehypothecation (collateral reuse)Rehypothecation, or reuse, is the use by a collateral taker of collateral it received, for example to deliver it in a repo or as its own margin. It is allowed under a title transfer arrangement or with the provider's consent under a security interest. Article 15 of the Securities Financing Transactions Regulation (SFTR) requires written disclosure of the risks and prior consent.
Securities lendingSecurities lending is the temporary transfer of securities from a lender, often a fund or pension scheme, to a borrower that returns equivalent securities later and pays a fee. The borrower gives collateral (cash or securities) above the loan value; lenders keep the economic benefit of income through manufactured payments.
Trade repositoryA trade repository is an entity that centrally collects and keeps records of derivatives or securities financing transactions reported by market participants, and gives regulators access to them. In the EU trade repositories are registered and supervised by the European Securities and Markets Authority (ESMA) under EMIR (derivatives) and SFTR (securities financing).