The Association for Financial Markets in Europe (AFME), FIA,
the International Capital Market Association (ICMA), the International Swaps and Derivatives Association, Inc. (ISDA) and the International Securities Lending Association (ISLA) have jointly published a statement that can be used to help market participants comply with new requirements under the European Union’s Securities Financing Transaction Regulation (SFTR).
The SFTR rules come into force from July 13, 2016, and will affect all existing and future title transfer and security collateral arrangements under a variety of financial agreements. Under the SFTR, all parties that accept collateral are obliged to inform their counterparties of the risks involved in entering a title transfer arrangement or granting a right to reuse collateral under a security arrangement.
The SFTR Information Statement is the result of a collaborative effort by AFME, FIA, ICMA, ISDA and ISLA, and has been drawn up to inform market participants of the general risks and consequences that may be involved in consenting to a right of use of collateral provided under a security collateral arrangement or of concluding a title transfer collateral arrangement. Market participants can tailor the statement to suit their own specific circumstances.