Cappitech and Kaizen Reporting publish findings of SFTR implementation survey

Cappitech and Kaizen SFTR implementation survey blog image


17 September 2019, London and Tel Aviv: Cappitech and Kaizen Reporting today published the findings of the SFTR implementation survey conducted by Cappitech, a leading provider of regulatory reporting and intelligence solutions for the financial services industry, and analysed by Kaizen Reporting, global leaders in quality and accuracy for regulatory reporting, in which securities financing market participants were asked to help establish the industry’s state of readiness.

While there is a greater state of readiness among the banks (due to go live in the first phase, April 2020) of reporting, the survey shows that 56% of banks are still only in the pre-implementation planning stages. The survey concluded that overall only 37% of the securities lending industry has started or completed SFTR implementation and expect to be ready in time when the regulation comes into force in phase one. 11.5% have not even begun to plan. While some allowance can be made for the fact that a number of respondents have later go-live dates, this is somewhat concerning.

The current lack of readiness across the industry for this new and complex regulation is highlighted by the survey. Both Cappitech and Kaizen Reporting believe industry participants need to prioritise planning, implementation and testing of robust processes for SFTR, to ensure timely implementation.

Jonathan Lee, Senior Regulatory Reporting Specialist (SFTR) at Kaizen Reporting said, “The findings from the SFTR survey make it clear that many companies are not as prepared as they should be at this stage. In order for firms to be ready by April 2020 there is a need to accelerate their plans and make sure that they allow enough time for testing and implementation.”

Ronen Kertis, Founder and CEO of Cappitech comments, “Reporting firms who aren’t ready, especially those that haven’t started planning, will need to prioritise this in the coming months. Where possible, an extension of their existing technology may provide an easier and more seamless transition.”

Reporting firms highlighted a number of additional concerns with SFTR including, most significantly, the issue of UTI matching; 54% of respondents felt they will need to implement UTI matching, with another 33% still considering it.

40% of survey respondents are also still undecided regarding which trade repository (TR) they are intending to use, bringing additional readiness to test. While tier 1 firms often decide based on board seats and shareholdings, for the rest of the market pricing will be key and most TRs have not yet published detailed pricing data.

Additional findings from the report include:

Vendor Selection: This is an ongoing process, with 58% of respondents planning to implement extensions of their current reporting tools.  

Delegated reporting: 51% of the banks surveyed are committed to providing delegated reporting. “Delegated reporting brings real challenges, not least of which is the need for clients to have control of and access to their reporting data to meet their regulatory requirements. Specific delegated reporting solutions  solve this challenge for banks when they offer delegated or assisted reporting to their clients,” says Mr. Kertis.

UAT testing: The report also shows that despite its importance, UAT testing has not been fully embraced by the industry. Approximately 54% plan to test in the three months prior to go-live but Kaizen and Cappitech experience proves that many regulatory programme deliveries are delayed, leaving minimal time for testing. This has a knock on negative impact on data quality and regulatory compliance. For the 11% who are planning not to do any testing, and the 7% whose planning only incorporates testing one month before, these risks are greater with Mr. Lee stating, “We would caution that three months will not necessarily prove sufficient to launch such a large and complex reporting regime.”

For a full copy of the report and to access further findings, please download it here.


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