Misalignment in fields 2.18 & 2.20 impacting Method Used to Provide Collateral

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Status: For Review, Last Updated: 31/08/2023

Question:
Validation field(s) in scope – 2.20

In comparison to field 2.18, it is mentioned in Validation rules that if the conditions do not meet, the field can be left blank. The absence of similar wordings for field 2.20 causes ambiguity where a trade is not collateralised.

Validation rules description of the field 2.20 states:

•“Indication whether the collateral is subject to a title transfer collateral arrangement, a securities finance collateral arrangement, or a securities finance with the right of use.”

•“Where more than one method was used to provide collateral, the primary collateral arrangement should be specified in this field.”

Validation rules description of the field 2.18 states:

•“If, for SL, field 2.73 is populated with 'true', or if field 2.72 is populated with 'false' and field 2.75 is populated with 'SECU', this field shall be populated. Otherwise it shall be left blank...”

Best Practice:
ISLA members propose that:
The existing validation rules be revisited to clarify if the wording “Otherwise, it shall be left blank” was purposefully not added under Conditional Validation for 2.20.

Clarification on this point will feed into industry practice, aligning firms reporting practices and reducing related reconciliation breaks. (SFTR-815)