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SFTR – How will it affect the commodities markets?

The Securities Financing Transaction Regulation (SFTR) was adopted by the European Parliament in November 2015 and published in the official journal on 23 December 2015, which means that it came into force on 12 January 2016. The regulation can be found here.

The rules apply to “commodities lending” as well as securities lending and include reporting requirements to Trade Repositories. Larger Non Financial Counterparties(NFC), as well as Financial Counterparties(FC), will be required to report, although smaller NFCs will be exempt when trading with an FC, who will need to report for them. The reporting requirements will be phased in, starting 12 months after the coming into force of the delegated act for certain FCs, going out to 21 months for NFCs.

In addition  there are several disclosure and record keeping requirements to be followed.

Reed Smith have published this summary of the rules, which provides a useful introduction to the requirements. This blog will track developments as they emerge. It is worthwhile for anyone in the commodities business to understand which activities qualify as “commodities lending” as soon as possible.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.


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