Template:Art 15 SFTR disclosure document

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Near-apocalypse caused by Art 15 title transfer disclosure statement

This is the regulatory initiative that, so say some commentators, nearly caused the boredom heat death of the universe when a well-meaning torpidity[1] of industry associations produced a 5,000 word disclosure document explaining to seasoned industry professionals (whom you would think would already know) what was meant by the expression “title transfer”.

This is mandated by Article 15 of SFTR. Firms engaging in such fripperies must send this disclosure to their counterparties wherever there is a title transfer collateral arrangement. Where, as in stock lending and collateralised derivatives trading, there is a mutual title transfer collateral arrangement (sometimes I have to post you collateral; sometimes you have to post me collateral), this leads to the faintly[2] absurd requirement for the counterparties to send each other the identical risk notification. WAY TO GO, ESMA. And heavens bless the Joint Chiefs of Staff of the Industry Associations contrived to make that simple statement — when you transfer legal title to your asset to me, it becomes mine, and you become my creditor for the return of an equivalent asset — fifteen pages long.

  1. A torpidity is the collective noun for a group of industry associations. True.
  2. There goes that British understatement again: I’m learning, after thirty years in these isles.