Sounds like your linux machine is the client, and connecting to your z/OS 
system running the IBM FTP server.

To use SFTP client on Linux, and connect to your z/OS machine running the SSH 
daemon, yes, you'll need the SSHD task running.

//SSHD   PROC                                     
//SSHD   EXEC PGM=BPXBATCH,REGION=0M,TIME=NOLIMIT,
// PARM='SH sshd'                                 
//STDOUT DD SYSOUT=*                              
//STDERR DD SYSOUT=*                              

And we have these files in /etc/ssh/

sshd.sh
#!/bin/sh                                     
nohup /usr/sbin/sshd -f /etc/ssh/sshd_config &
sleep 1                                       

sshd_config  (lots of comments removed)
Protocol 2                              
HostKey /etc/ssh/ssh_host_rsa_key       
SyslogFacility DAEMON                   
LogLevel DEBUG3                         
Subsystem sftp /usr/lib/ssh/sftp-server 

and then we've generated the private and public keys in /etc/ssh too, using the 
ssh-keygen command.

The IBM Ported Tools manuals should clarify everything for you though.

Regards
Patrick Loftus

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