Reporting Taiwanese Collateral

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Status: Best Practice Finalised, Last Updated: 26/04/2021

Question:
How should Taiwanese collateral be reported for SFT parties classified as "Offshore"?

Best Practice:
Regulatory market convention for pledged Taiwanese collateral obliges lenders to pay a notional rate of interest where the trading party is classified as "Offshore". This means that collateral should be booked and processed as a borrow transaction where the collateral is received and a loan where it was delivered, to correctly accrue the applied rates.

Based on member feedback, the most common practice is book collateral with a notional rate, e.g. 0.0001%.

Therefore, proprietary and vendor system owners need to include provisions recognise Taiwanese collateral booked as loans and borrows and transpose them correctly, to report them as collateral. (SFTR-163)