SFTR – Enforcement Action against the EU Commission

SFTR – Enforcement Action against the EU Commission

With regret, we announce we have commenced action against the European Commission (EC) for its failure to adopt or otherwise the SFTR RTS (regulatory technical standard) as ESMA presented to them on 31 March 2017.

We previously explained the basis for action and had sought to engage privately with the EC but they have refused to answer. A prominent news service presented our legal ratio to them and requested comment but nothing of substance was forthcoming.

Under EU law, the Commission has 3 months to adopt or request modifications of an RTS or ITS. It has been 14 months.

We hope formal action will now spur the EU to either adopt the long overdue RTS or explain the precise cause for delay.



Our action has resulted in the Commission formally replying to us. We welcome this. However the industry’s fundamental concerns remain. We are pursuing our action for the sake of the securities lending industry. We believe it will provide much needed clarity.


UPDATE 5 July 2018:

The commission has updated us further on the start date (details to be published later today), so we can now reveal their former letter. Our SFTR conference on 5 September (see homepage) is an opportunity to understand the granular details now that the timescale is becoming clearer.


Dear Mr Malik,
Thank you for your email of 20 April to XXXXXXXXX who forwarded your request to my department.

In your email, you are enquiring about the technical standards under Regulation (EU) 2015/2365 on transparency of securities financing transactions and of reuse (SFTR). An important number of draft technical standards (four regulatory technical standards and two implementing technical standards) were submitted by the European Securities and Markets Authority (ESMA) to the European Commission on 31 March 2017 and are currently still under the Commission’s scrutiny.

These draft regulatory and implementing technical standards are necessarily lengthy and of a complex technical nature, covering detailed reporting requirements, calculation methodologies and broader issues concerning the authorisation and operations of trade repositories. The European Commission started its thorough scrutiny of the standards as soon as they were received from ESMA and has continued to do so, without any interruptions, to this date.

Recognising the high number and wide range of market participants that will ultimately have to implement the requirements of the technical standards, it is of paramount importance that the final versions of the standards to be adopted by the Commission are legally sound under the existing regulatory framework and provide the necessary’ clarity and legal certainty. In order to ensure this, a significant amount of coordination and cooperation across various departments of the European Commission is required. Importantly, the draft technical standards submitted by ESMA cross-refer to each other and, therefore, cannot be adopted sequentially as soon as they are ready but only jointly, once all standards are ready. As a consequence, specific issues still requiring clarification in a small number of technical standards have a direct impact on the adoption timing of the remaining standards. Finally, the scrutiny of the draft technical standards unfortunately also coincides with multiple other priorities of the European Commission in the policy field of financial services during a time of a particularly heavy regulatory agenda.

The delay in the treatment of this case is due to these reasons. In no case can it be taken, as such, as an approval or refusal ofthe text presented by ESMA. We hope that this explains why the scrutiny of the draft technical standards under SFTR is taking time. Please be assured, however, that we attach significant importance to these technical standards and have done so since they were submitted by ESMA. We aim at finalising our scrutiny as soon as possible.

Yours sincerely,



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