The European Securities and Markets Authority (ESMA) regulates securities financing activities by setting out verification, aggregation, comparison and publication of data on securities financing transaction reporting requirements, data access and collection (SFT) by trade repositories (TRs). The Securities Financing Transactions Regulation (SFTR) is the main piece of EU legislation in this area.
The SFTR regulates transactions which refer to the build-up of leverage, pro-cyclicality, liquidity and maturity transformation, and interconnectedness in the financial markets. These include repurchase transactions, securities or commodities lending and securities or commodities borrowing, a buy-sell back transaction or sell-buy back transactions.
Regulations have recently been issued in order to implement the SFTR.
Competent Authority Powers
Under the new regulations, the Malta Financial Services Authority (MFSA) has been given the power to impose administrative penalties and administrative measures for breaches of the SFTR such as for instance:
When determining the type and level of administrative penalties and other administrative measures, the MFSA as the local competent authority shall take into account all relevant circumstances including the gravity and duration of the breach and the degree of responsibility of the person concerned. The MFSA shall publish any decision imposing an administrative penalty or other administrative measure in relation to breaches under the SFTR. All decisions shall be subject to appeal from the Financial Services Tribunal.
This article was written by Dr Cherise Abela Grech and Dr Luke Mizzi.
Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them