FIA, AFME, the Global Foreign Exchange Division of the GFMA, and ISDA have jointly responded to the European Securities and Markets Authority’s Call for Evidence seeking industry input on simplifying regulatory reporting requirements in the European Union.
The associations highlight industry concerns with current requirements and provide ways in which the burden on market participants can be reduced without impacting the quality and usability of data used by regulatory authorities for the oversight of systemic risk and the detection of market abuse. The associations’ response and recommendations take into account engagement with members spanning many years.
Key challenges and cost drivers associated with the existing regulatory reporting framework in the EU include:
- Frequent regulatory changes and lack of flexibility to enable a phased implementation, synchronisation and coordination of the changes in the different reporting regimes
- Duplicative reporting of the same derivative instruments under MiFIR, EMIR, and REMIT
- Duplication of IT systems and processes
- Dual-sided reporting obligation under EMIR and SFTR
Of the options proposed by ESMA within the Call for Evidence, the associations believe that Option 1a (Delineation by instrument) will be the most effective and cost-efficient way to eliminate duplication and streamline reporting. In accordance with this option:
- A clear delineation of reportable instruments between MiFIR and EMIR will ensure that a single transaction in a specific type of instrument will only be reported once. Firms currently face duplicative reporting obligations for the same derivative instruments under MiFIR, EMIR, and REMIT. In the response, the associations call for each transaction to be reported under a single regime only, supporting the removal of exchange-traded derivatives from EMIR and OTC derivatives from MiFIR.
- The introduction of single-sided reporting under clear logic to identify the report submitting entity. The dual-sided reporting model under EMIR and SFTR is identified as a major cost driver. The associations advocate for a shift to single-sided reporting, which would reduce the number of reports, simplify processes and align with global standards. Furthermore, the associations propose that all trades carried out on a trading venue and centrally cleared should be reported to the competent NCA by the trading venue or the CCP.
FIA believes that the Call for Evidence offers a unique opportunity to identify not only how data is collected, but also (and most importantly) why and whether it needs to be collected. The associations propose a thorough assessment of data with the aim of limiting the reportable fields to only those that are essential for regulators to perform the supervisory functions associated with each reporting regime.
Read the response here.
