Fails Curing Reporting

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

Question:
Should fails curing (intraday securities borrowing) be reported?

Best Practice:
Intraday fails curing or borrowing are reportable SFTs, providing that the counterparts are within jurisdiction and therefore eligible.

ESMA Guidelines Reporting under Articles 4 and 12 SFTR: 06 January 2020

37. Fails-curing refers to the securities lending and borrowing arrangements of CSDs amongst their participants, aimed specifically at reducing settlement fails. A similar mechanism exists on the cash side, as intraday credit/overdraft to CSD participants.

39. ESMA confirms that such securities lending and borrowing arrangements fall under the definition of an SFT and as such are subject to SFTR reporting obligations.

ESMA Guidelines Reporting under Articles 4 and 12 SFTR: 06 January 2020

11. The following transactions should not fall under the definition of an SFT and should not be reported under SFTR:
a) Retail client lending governed by consumer credit legislation
b) Private banking loans and Lombard loans not related to securities financing
c) Syndicated lending and other corporate lending for commercial purposes
d) Overdraft facilities of custodians and CCP daylight lending facilities
e) Fails-curing intraday credit / overdraft
f) Central bank auto-collateralisation
g) Give-ups and take-ups in the execution and clearing chain
h) Commodities transactions entered into for operational and/or industrial purposes
i) Transactions involving emission allowances

The ICSDs that offer fails-curing facilities also offer voluntary delegated reporting services. (SFTR-170)