SFTR - The Forgotten Reg

Luke Skinner 07.02.2018

After a busy 2017 at the Strategy, Projects and Change desk at Morgan McKinley, we are beginning to see the contract market heat up in financial services as we progress into the New Year. Instrumental in driving much of the project roles last year was the MiFID II programmes which saw a great deal of hiring in the regulatory space.

However, as MiFID II has reached the implementation stage at the turn of the year, we expect to see a very different 2018 for regulatory projects. Unsurprisingly, we have seen an initial wave of Brexit related hiring, yet somewhat less headline grabbing but still significant in the projects space will be the Securities Finance Transaction Regulation (SFTR).

SFTR is born out the European Commission’s concern on high risk activities moving from the regulated banking entities in the EU into unregulated ‘shadow banking’ entities. In broad terms, SFT's involve any transaction whereby securities are used to borrow money – which in the banking system mostly involves repurchasing agreements, whereby the ownership of securities temporarily changes in return for cash. 

Given the nature of SFT’s and their change in ownership, the EU aim to enhance transparency and oversight of the exchanges in order to better enable regulators to monitor risks to the financial system. In practical terms, this means that banks are required to implement transaction reporting requirements for SFT’s in a style similar to that of EMIR. It will also introduce limitations on the reuse of collateral, whereby collateral providers must be informed of the risks and consequences of its reuse by the receiver.

Given the prevalence of MiFID II recruitment in the regulatory contract market in 2018, we expect to see much of the contract headcount shifted internally to SFTR programmes within financial institutions. Therefore it is doubtful we will see hiring on the same kind of scale as we did with MiFID II last year – yet we still expect it to play a significant part in the regulatory space. Certainly, we anticipate that candidates with transaction reporting backgrounds, particularly with EMIR experience, will be of great value to SFTR programmes throughout financial services.

If you would like to register your interest for SFTR opportunities, please contact the Strategy, Projects and Change team at Morgan McKinley by emailing your CV to spc@morganmckinley.com or alternatively call 0207 092 0264.

Luke Skinner's picture
Team Leader | Project and Change Management
lskinner@morganmckinley.co.uk