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ESMA PUBLISHES VALIDATION RULES AND XML SCHEMAS FOR SFTR REPORTING

With SFTR set to go live in April of next year, ESMA has published (link) the Validation and XML schemas of the new regulation. The XML structure is part of the ISO 20022 standard that was created to provide an industry-wide framework for financial messages such as for payments and securities trading.

Common reporting language

One of the goals of ISO 20022 is that ESMA aims to improve reporting quality under SFTR. This comes as the similar structured EMIR regulation has been beset with data issues. Specifically, with each trade repository having its own unique submission formats, this has caused data matching between repositories to be difficult (more on this problem).

By unifying the submission format between reporting parties and repositories to the XML based ISO 20022, it will be easier for data to be shared and matched among repositories. Also, reporting firms will now experience less file format differences when submitting to more than one repository or switching between repositories in the future.

XML vs CSV

While data sharing is expected to improve under the ISO 20022 standard, the major drawback is that creating SFTR files in the XML format is not easily done. This differs from EMIR, of which trade repositories allow for CSV file format submissions and provide report templates that can be manually filled if needed. However, under SFTR, creating manual XML files, even for reports of only a handful of trades becomes much more difficult.

ESMA XML Schema

In the current data published by ESMA, the information is broken down between counterparty and loan data that is submitted to trade repositories, intra-trade repository data sharing and reports sent by repositories to ESMA and NCAs. The reports include explanatory PDFs, XML to report field mapping, and XSD files with the XML schema validations.

For reporting firms, the counterparty and loan data information are the files and templates that will be used for creating and submitting SFTR reports to trade repositories. These files and validation schemas are found under 052, 070 and 071 of the published PDF, CSV and XSD files provided b ESMA for download. The remaining 079, 080, 083, 085 and 086 files are for the use of repositories and NCAs.

Preparing for SFTR, learn how Cappitech can help with CSV to XML conversions and automating your daily reporting

 

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Written By

Ron Finberg

Ron Finberg

Arriving to Cappitech with a journalist background, one of my goals with the Cappitech Blog is to simplify Financial Regulation.

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