SFTR Q&A 11: Reporting LEI changes following Corporate Actions

SFTR reporting parties and those involved in the business of promoting SFTR data quality are forever grateful for all of the Q&A and guidance they receive given the complex and imprecise nature of what is still a relatively immature regulation.

Uncertainty is after all the curse of operations and compliance managers when it comes to ensuring compliance with transaction reporting regimes. Certainty is very much the Holy Grail….

Unfortunately, the latest Q&A is really such an edge case that it does very little to relieve that uncertainty. There remain many unanswered questions and uncertainty in how to populate many of the fields that are required for the majority of SFTR reports (such as which jurisdiction to use (incorporation or headquarters) and what type is the definitive answer to security/collateral type fields). We urge regulators not to sit on the fence but either to provide precise, exact answers or ultimately remove fields from the schema.

Question 11 “LEI Changes due to Mergers & Acquisitions” was published on 21 September and answers a) Which data fields should be updated in case of corporate restructuring events affecting the LEI?  and b) To which entities the information on the LEI update should be broadcasted?

In response to:

1. ESMA stated that following receipt of a notification regarding a corporate restructuring, Trade Repositories (TRs) should identify all outstanding SFTs in which the LEI of the Reporting counterparty, Other counterparty, Entity responsible for the report, Report submitting entity, Beneficiary, Tri-party agent, Broker, Clearing member, Central Securities Depository (CSD) participant, Agent lender, CCP or LEI of the issuer have changed and replace the old identifier with the new LEI.
2. For other corporate restructuring events e.g. partial acquisitions and spin-offs affecting only a subset of outstanding SFTs, the new entity should provide the TR with the UTIs of the SFTs impacted by that event. The TR should then inform all of the other relevant parties to the transaction of the change.

• If you require help to navigate through the complexity of SFTR reporting or would like to explore the benefits of quality assurance through regulatory testing then please contact us.