Swiss financial authorities are continuing to analyse securities finance data amid calls for greater transparency from global regulators.

A series of recommendations on so-called shadow banking activities have been issued by the Financial Stability Board (FSB) in recent years.

These recommendations have driven individual responses and varying rules across different jurisdictions.

In the US, the Office for Financial Research (OFR) has been collecting securities lending data from agent banks.

The European Union’s (EU) response has been to introduce the Securities Financing Transaction Regulation (SFTR).

This will eventually require firms to report details of their securities finance transactions to an EU-registered trade repository.

Switzerland, which is not part of the EU, is still considering how best to implement the FSB’s recommendations.

Some market participants believe the country will eventually go down a similar reporting route to the EU, given its proximity.

However, according to the Swiss State Secretariat for International Financial Matters (SIF), Switzerland is still in an analysis stage.

“The EU has certainly been an early mover with SFTR,” SIF told Global Investor. “However, in Switzerland, we’re still determining how the FSB standards should be addressed.”

According to sources, various technical and political aspects will ultimately determine how Switzerland proceeds.

In September, SIF published a case study, conducted by several Swiss authorities, on Switzerland's securities borrowing and lending (SBL) and repo activity.

Twenty five market participants, including banks, fund managers, insurance companies, pension funds and corporates, took part in the study.

According to SIF, the exercise proved useful in getting an initial sense of certain securities finance transaction (SFT) volumes in the Swiss market and where securities finance data gaps could exist.

SFTR

While Switzerland considers its options, the EU’s SFTR now looks set to enter into force in early 2019.

A unique aspect of the EU’s reporting rules is that they apply to EU and third-country counterparties if the SFT is transacted through an EU branch of that third country counterparty.

For example, a stock loan between a US pension fund and the Paris branch of a Swiss bank would be included in the scope of the regulation because one party to the trade is an EU branch even though neither the lender nor the borrower’s principal office is in the EU.

A legal expert recently told Global Investor that Britain’s exit from the EU could possibly lead to a “UK lite” version of SFTR. 

Meanwhile, others fear that the mind-numbing volumes of securities finance data from SFT could swamp regulators, leaving EU authorities struggling absorb the information they’ve asked for.