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ESMA Newsletter – Nº20

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Welcome to the 20th edition of ESMA’s newsletter.

Since our last newsletter, key publications have been our Brexit-related Statement MiFID II’s requirements on 3rd country firms offering services to investors, ESMA’s Common Supervisory Action on UCITS costs and fees and a call for candidates to join our a Consultative Working Group (CWG) for the ESMA’s Commodity Derivatives Task Force (CDTF). 

In this month’s edition we introduce the first of an occasional series of articles focusing on specific areas of ESMA’s work – this month we look at ESMA’s role in the development and implementation of global standards for derivatives reporting.

​Take a look at our monthly newsletter to find out more about these activities and don’t forget to follow our Twitter and LinkedIn accounts to stay up to date with our full range of initiatives. 

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SAVE THE DATE – ESMA 10 YEAR ANNIVERSARY CONFERENCE – 23 March 2021

On 1 January 2021, ESMA turned 10 years old and, as part of our anniversary celebrations, we will host an online conference which will reflect on the progress the Authority has made in its first decade and look to its future.

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The event is scheduled to take place between 1500 and 1900 on the afternoon of 23 March 2021.

Further details will follow.

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ESMA takes global lead on implementation of CPMI-IOSCO standards for derivatives reporting

A few weeks ago, ESMA released the final report on draft technical standards that were developed as part of the EMIR REFIT Regulation. With its publication, the EU’s securities markets regulator is on the way to earning a reputation for establishing the highest standards in derivatives reporting and data quality worldwide.

Since 2014, ESMA has been actively involved in the development of global technical guidance by CPMI-IOSCO which specifies definition, format and usage as well as fosters harmonisation of critical OTC derivatives data elements reported to Trade Repositories.

EMIR is an evolving and mature regulation. To date, ESMA has updated the reporting format twice and has also been looking closely at improved data quality from reports. The enshrining of CPMI-IOSCO standards in EU reporting rules is an important first step towards global reporting harmonisation and it demonstrates ESMA’s continuous commitment to international standardisation.

By following this best practice approach the EU’s securities markets regulator is among the first institutions in the world to align EU derivatives reporting with globally agreed recommendations.

Bringing EU OTC derivatives reporting requirements in line with globally recognised guidance generates a multitude of positive effects that go beyond technical considerations. Apart from a more easily reconcilable data set and substantially improved data quality, another major benefit is easing the compliance burden on entities that are subject to derivative reporting requirements in non-EU jurisdiction(s).

The final report on the technical standards released by ESMA on 17 December 2020 was based on feedback from open public consultations and includes the following key features:

  • End-to-end Reporting in ISO 20022 XML
  • fully standardised reporting format
  • facilitates economic analysis for regulators
  • enhances data quality and consistency
  • reduces need for data cleaning
  • enhances data validation and reconciliation
  • enables resolution of data quality issues by reporting entities
  • Revamped Reporting for Counterparties
  • alignment with international standards
  • easier compliance for entities reporting in other jurisdictions
  • increased clarity of reporting requirements
  • Harmonised Data Processes across Trade Repositories
  • enhanced and harmonised requirements for data quality, validation and reconciliation processes
  • introduction of soft data quality checks
  •  Simplified Rules for Extension of Registration from SFTR to EMIR
  • consistency with the corresponding SFTR requirements
  • reduction of duplicative paperwork
  • Standardised Data Access
  • ESMA determines type of information and timeline for data access by authorities

What specific benefits can stakeholders expect?

ESMA’s initiative responds to the long-standing industry plea to align reporting requirements across jurisdictions, whilst further clarifying and enhancing data quality requirements. This is expected to significantly increase the usability of EMIR data.

Reporting Entities

Reporting entities will be able to make use of the standardised feedback information provided by Trade Repositories for resolution of data quality issues and will benefit from standardisation of data reconciliation by TRs.

The new requirements also facilitate choice of and transition to a new a Trade Repository, by introducing a common way of reporting to all TRs.

Overall, reporting entities will benefit from clearly specified reporting requirements and alignment with CPMI-IOSCO guidance.

Trade Repositories

Trade Repositories will benefit from more precise requirements which facilitates compliance with EMIR. The increased standardisation and harmonisation of processes across Trade Repositories will simplify data validation and inter-TR reconciliation.

Authorities

Authorities will have access to more comprehensive information about derivatives contracts. The expected higher quality of the data will lead to greater data usability. The amended technical standards ensure timely and fully standardised access to derivatives data by authorities/regulators.

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​ESMA has launched on 6 January 2021 a Common Supervisory Action (CSA) with NCAs on the supervision of costs and fees of UCITS.The CSAs aim is to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework, and the obligation of not charging investors with undue costs. It will be conducted during 2021.

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ESMA has issued on 13 January 2021 a Public Statement to remind firms of the MiFID II requirements on the provision of investments services to retail or professional clients by firms not established or situated in the European Union (EU). ESMA reminds firms that “where a third-country firm solicits clients or potential clients in the Union or promotes or advertises investment services or activities together with ancillary services in the Union, it should not be deemed as a service provided at the own exclusive initiative of the client”.

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ESMA has published on 25 January 2021 a call for candidates to renew a Consultative Working Group (CWG) for the ESMA’s Commodity Derivatives Task Force (CDTF). Interested experts are asked to send their application to ESMA by 7 March 2021.

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ESMA launched on 23 December 2021 a consultation on specific aspects of the procedural rules for imposing fines and penalties on Data Reporting Services Providers (DRSPs) under ESMA’s direct supervision. The closing date for responses is 23 January 2021. ESMA will consider the responses to this consultation in providing technical advice to the Commission by end of Q1 2021.

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Speakers

Speaking appearances by ESMA Staff in January

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@ESMA

Vacancy Notices

Open vacancies & deadlines 

Vacancy

Traineeship notice – Legal profile (F/M)                             28/02/2021

Traineeship notice – Transversal profile (F/M)                  28/02/2021

Traineeship notice – Financial Markets Profile (F/M)        28/02/2021

All open vacancies can be found on ESMA’s recruitment portal 

Important consultations closing next month

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Missed any ESMA publications? Check out the full list of news items on our website. 

This news item was originally published by the European Securities and Markets Authority (ESMA). For more information, please see the Source Link.

Regulator Information

Abbreviation: ESMA
Jurisdiction: ESMA

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