Can you please elaborate on the importance of raising awareness within front, middle and back office of their reporting obligations under SFTR?

When an institution has to face a big change the most important thing is to create an environment, a culture of doing right in all Departments involved. As a Bank, in the last years, we have built a large experience in implementing new Regulations. We can therefore easily predict what objectives people have to attain. In particular, front, middle and back office must work together, but these aren’t the only units involved. The cooperation of Legal, Risk Management, Accounting, IT, as well as other Departments is essential to succeed. 

Generally, the front office has main contacts with counter parties and can share the “feeling” of how the new rules will impact and can attain new developments on the daily activities. In order to draw up an efficient implementation, it is important to share all the information within the sectors to create the “culture” mentioned above.

It is crucial to guarantee a good governance of the teams involved and consider as priority the clear delineation of each single role and what it is required to reach small objectives (weekly or monthly) set out in the shared timeline.

In conclusion, as the implementing of the regulation is very complex, we will probably need some help from consulting firms that have hands on experience on this matter with other institutions. 

How can you ensure efficient management of the volume of SFT transactions?

In my opinion an aspect of the efficiency in managing SFT transactions is linked to the systems used to book this kind of transactions. In our case, for example, we use three front office tools connected to middle and back office procedures. This in turn causes a huge waste of time in matching all the trades. Consequently, it is possible to be more efficient by using only one front office position with the capabilities to accept all trades. The new regulation could be the occasion to start a review of the SFT processes if needed.

Considering the case of a medium size Bank, like Banco BPM, from an organizational point of view, it is important to give authorization to close SFT transactions to no more than one front office line. This will ensure an efficient use of available collateral for all that is needed. It is crucial to have the possibility to manage centrally the SFT transactions for having a total view in choosing the best type of transaction to realize the objectives. 

Why is it important to develop a consistent approach to SFTR reporting and management?

The new reporting rules are a huge challenge in relation to the whole SFT regulation and this is really a revolution. We saw something similar on the EMIR regulation a few years ago. From that experience we learned to work together. The teams built are more or less the same which is good, but vital now that all activities are started as early as possible. The new environment of rules is linked to Brexit. At this point therefore, taking the right decisions will make a difference when the impact of Brexit will be clear.

What would you like to achieve by attending the 2nd Edition SFTR Implementation?

I would be interested in sharing experiences with the industry and the regulators. Having more points of view at this stage could help consider more aspects. It is a good occasion for having a complete outlook with all the parts involved.