ESMA Newsletter - Nº20

 

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.

 

 

 

 

​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. 

 

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”.

 

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.

 

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.

 

Speaking appearances by ESMA Staff in January

 

 

  

Vacancy Notices 

Open vacancies & deadlines 

 

 

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

• The full list of consultations and reply forms can be found on the ESMA consultations page

 

 

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

• Most recent publications

• 29 January    ESMA supports the endorsement of IFRS 17 insurance contracts	ESMA , has today published its response to the European Financial Reporting Advisory Group’s (EFRAG) consultation on its draft advice on the endorsement into European law of the new international accounting standards for insurance contracts (IFRS 17). ESMA supports the endorsement of IFRS 17 which will provide a consistent system of requirements to account for insurance and reinsurance contracts.
  28 January   ESMA updates EMIR Q&A’S	ESMA has today updated its Questions and Answers document on practical questions regarding reporting issues under the European Markets Infrastructure Regulation (EMIR).
  28 January    ESMA appoints chairs to its Investor Standing Committee and Sustainable Finance Network	The Board of Supervisors of the European Securities and Markets Authority (ESMA) has appointed the following individuals to serve as chairs of its standing committees: Rodrigo Buenaventura, Chair of the Comisión Nacional del Mercado de Valores (CNMV), Spain will chair the Investor Protection and Intermediaries Standing Committee (IPISC); and Montserrat Martínez Parera, Vice-Chair of the Comisión Nacional del Mercado de Valores (CNMV), Spain will chair the Coordination Network on Sustainable Finance (CNS).
  28 January    ESMA updates its Q&As relating to the Prospectus Regulation	ESMA has today updated its Questions and Answers (Q&As) on the Prospectus Regulation with six new Q&As.
  28 January   ESMA updates SFTR Q&A’s	ESMA has today updated its Questions and Answers related to reporting under the Securities Financing Transactions Regulation (SFTR).
  28 January   ESMA appoints new Management Board member	ESMA has appointed a new member to its Management Board to fill a vacancy following the departure of a member of the Board of Supervisors. The appointment took place at the Board of Supervisors meeting in Paris today, 28 January.
  27 January  ESMA reports on the resources and staffing it will need to apply new rules for third-country firms under MiFIR	ESMA, has published its Report containing the assessment of ESMA’s staffing and resources needs arising from the assumption of powers and duties in accordance with the new MiFIR regime for third-country firms.
  25 January   ESMA call experts on commodity derivatives to join consultative industry group	ESMA has today published 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.
  21 January ESMA updates Guidelines on written agreements between CCP college members	ESMA has today published the final report on its revised Guidelines regarding written agreements between members of CCP colleges.
  18 January  ESAs publish final draft ITS on reporting templates for intra-group transactions and risk concentration under FICOD	The European Supervisory Authorities - ESAs (the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) submitted today to the European Commission the final Report on the draft Implementing Technical Standards (ITS) under the Financial Conglomerates Directive (FICOD) on reporting templates for intra-group transactions (IGT) and risk concentration (RC). The draft ITS aim at further increasing comparability amongst conglomerates of different EU Member States thereby improving supervisory consistency.
  15 January ESAs’ Board of Appeal dismisses case against the EBA on alleged non-application of Union law as manifestly inadmissible	The Joint Board of Appeal of the European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority) published today its decision in relation to an alleged non-application of Union law by eight national competent authorities brought by Mr Howerton against the European Banking Authority (EBA). In its decision, the Board of Appeal dismisses the Appellant’s claim as manifestly inadmissible as the facts described do not seem to involve a subject-matter within the remit of the EBA nor of the Board of Appeal.
  13 January ESMA reminds firms of the MiFID II rules on reverse solicitation	ESMA is issuing 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).
  12 January  ESAs’ BoA decides in ESMA’s favour in the appeal by Scope Ratings	The Joint Board of Appeal (BoA) of the European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority) decided in ESMA’s favour in the appeal put forward by Scope Ratings GmbH (Scope) against ESMA’s decision from May 2020.
  11 January  ESAs' Joint Board of Appeal dismissed appeal by Scope Ratings GmbH against the European Securities and Markets Authority	The Joint Board of Appeal of the European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority) unanimously decided to dismiss the appeal brought by the credit rating agency Scope Ratings GmbH against the European Securities and Markets Authority (ESMA) in relation to the interpretation of the applicable legal provisions of the Credit Rating Agencies (CRA) Regulation.
  08 January  Publication of transparency calculations update after the end of the Brexit transition period	ESMA has published today its first Financial Instruments Transparency System (FITRS) file following the end of the Brexit transition period.
  08 January  Call for candidates for the ESA’s Board of Appeal	A call for expression of interest by the European Commission for the appointment of members of the ESA’s Board of Appeal for the financial services sector has been launched: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:C:2021:006A:TOC Closing date for applications to the European Commission is 8 February 2021.
  07 January  CFTC and ESMA Sign Enhanced MOU Related to Certain Recognized Central Counterparties	The Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA) today announced the signing of a new Memorandum of Understanding (MOU) regarding cooperation and the exchange of information with respect to certain registered derivatives clearing organizations established in the United States that are central counterparties (CCPs) recognized by ESMA under the European Market Infrastructure Regulation (EMIR).
  06 January  ESMA launches a Common Supervisory Action with NCAs on the supervision of costs and fees of UCITS	ESMA is launching a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union (EU). The CSA will be conducted during 2021.
  06 January ESMA promotes transparency for TLTRO III transactions	ESMA issues today a public statement promoting transparency in the IFRS financial statements of banks regarding accounting for the third series of the European Central Bank’s (ECB) Targeted Longer-Term Refinancing Operations (TLTRO III).
  05 January  Publication of financial instruments reference data after the end of the Brexit transition period	ESMA has published today its first set of Financial Instruments Reference Data System (FIRDS) files following the end of the Brexit transition period.
  04 January Brexit: ESMA withdraws the registrations of six UK-based credit rating agencies and four trade repositories	ESMA, the supervisor of European Union (EU) credit rating agencies (CRAs) and trade repositories (TRs), has withdrawn the registrations of the following United Kingdom (UK) based CRAs: AM Best Europe-Rating Services Ltd; DBRS Ratings Ltd;   And the following UK-based TRs: DTCC Derivatives Repository Plc; UnaVista Limited; CME Trade Repository Ltd; and ICE Trade Vault Europe Ltd. Fitch Ratings Ltd;Fitch Ratings CIS Ltd;Moody’s Investors Service Ltd; The Economist Intelligence Unit Ltd;
  23 December ESMA consults on fines and penalties for benchmark administrators	ESMA, today launches a consultation on specific aspects of the procedural rules for imposing fines and penalties on Benchmark Administrators under ESMA’s direct supervision.
  23 December ESMA consults on fines and penalties for Data Reporting Services Provider	ESMA, today launches 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.
  23 December ESMA updates guidance on waivers from pre-trade transparency	ESMA published today an updated opinion providing guidance on pre-trade transparency waivers for equity and non-equity instruments. It covers guidance related to request for quote systems, guidance on how trading venues should apply for a waiver to their national competent authority, and updates on frequently encountered issues when assessing waiver notifications.
  22 December ESMA announces 10 Year Anniversary Conference	ESMA, will turn 10 on 1 January 2021 and, as part of our anniversary celebrations, we will host an online conference on 23 March to reflect on the progress the Authority has made as a financial regulator and look to its future.