Recital (5)

Securities financing transactions allow market participants to manage their liquidity and funding needs in a flexible manner. Market trends indicate a growing use of such transactions on trading venues. Certain securities financing transactions that are executed on trading venues would fall within the scope of the T+1 settlement cycle requirement. However, given the non-standardised nature of such transactions and, in particular, the non-standardised settlement periods that might need to be agreed to by the parties to such transactions to achieve their objectives, and to avoid discouraging their execution on trading venues, those transactions should be exempt from the T+1 settlement cycle requirement. At the same time, to avoid any risk of circumvention of the T+1 settlement cycle requirement, the exemption should apply only if the securities financing transactions in question are documented as single transactions composed of two linked operations. As a consequence, and for the purposes of the T+1 settlement cycle requirement, undocumented securities financing transactions should be subject to that requirement. An explicit exemption is not needed for margin lending transactions as they are not transactions in transferable securities and therefore fall outside the scope of the T+1 settlement cycle requirement.