Supervisory convergence

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today updated its Questions and Answers (Q&As) on the Securitisation Regulation (Regulation 2017/2402).

The majority of Q&As in this document provide clarification on different aspects of the templates contained in the draft technical standards on disclosure which were recently published by the European Commission. In particular, the Q&As clarifies how several specific fields in the templates should be completed and also contains clarifications relating to STS notifications and securitisation repositories.

This fourth version of the Securitisation Q&As includes a summary table giving an easy overview of the list of Q&As. The order of some Q&As has been slightly adjusted compared to the previous version with a view to grouping Q&As treating similar topics. To ensure traceability, the overview table lists the number of each Q&A in the previous version where it is different from the new version.

The purpose of this document is to promote common, uniform and consistent supervisory approaches and practices in the day-to-day application of Securitisation Regulation and help regulated entities comply with their obligations.

ESMA will continue to develop this Q&A on the Securitisation Regulation in the coming months and will review and update them where required.

The European Securities and Markets Authority (ESMA) has today published the results of a peer review it conducted into supervisory actions of six National Competent Authorities (NCAs) regarding their approaches at enhancing the quality of derivative data reported under the European Market Infrastructure Regulation (EMIR). 

This peer review complements ESMA’s Data Quality Action Plan (DQAP) in order to further improve the quality and usability of derivatives data.       

The review was targeted at those six NCAs who supervise important derivative markets in the European Union (EU) and have key counterparties reporting their derivative trades to EU Trade Repositories, namely:

  1. the Netherlands Authority for the Financial Markets (AFM);
  2. the French Authority of the Financial Market (AMF);
  3. the German Federal Financial Supervisory Authority (BaFin);
  4. the Central Bank of Ireland (CBoI);
  5. the Cypriot Securities and Exchange Commission (CySEC); and
  6. the UK Financial Conduct Authority (FCA).

In addition, ESMA was reviewed in its role as direct supervisor of Trade Repositories (TRs).

Review finds differences across Member States

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The peer review assessed how the six Authorities supervised data quality under EMIR in the following areas:

  • NCAs’ supervisory approach to EMIR data quality;
  • Integration of EMIR data within the NCA’s overall supervisory approach; and
  • NCAs’ access, assessment and analysis of EMIR data quality.

The review delivered mixed results for the six NCAs. The majority of NCAs had a supervisory approach to EMIR data quality in place. However, two NCAs lagged behind when it comes to integrating EMIR data quality controls into their overall supervisory approach, which negatively impacted the NCAs’ ability to access, assess and analyse EMIR data.

ESMA identifies good practices and sets out plans to improve supervision of data quality    

The review also identified good supervisory practices by the six Authorities. These good practices should be considered by all NCAs and, where appropriate, incorporated into existing

supervisory approaches. ESMA has also put forward several initiatives to improve the supervision of EMIR’s data quality in the short and long-term. The short-term initiatives include: revising NCAs’ annual Data Quality Review exercises and identifying how NCAs can regularly use the data as part of their overall supervisory approach.

Background

Under EMIR, counterparties established in the EU must report details of any derivative contract they have concluded, modified or terminated, to registered TRs, which are supervised by ESMA. The reporting obligations apply to all derivative transactions (both over the counter and exchange-traded and cleared and non-cleared) of all asset classes. One of the many objectives of EMIR is to aim to reduce and identify systemic and counterparty risk and help prevent future financial system collapse by providing regulators high quality data.

ESMA and NCAs jointly launched the Data Quality Action Plan (DQAP) in September 2014. The DQAP is a voluntary self-assessment exercise based on annually agreed assessment criteria, undertaken by NCAs and ESMA, to improve the quality of certain aspects of data quality. However, separate to this exercise, ESMA decided in 2018 to conduct a peer review on supervisory actions aiming at enhancing the quality of data reported under EMIR. Undertaking a peer review is an additional tool available to improve data quality.

Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA), addressed the EU-Asia Financial Dialogue as part of ASIFMA's Annual Conference 2019 in Tokyo this morning.

The address focused on ​Building the EU Capital Markets Union while fostering global financial markets ​covering topics such as sustainable finance, cryptocurrencies and EU markets supervision, while also focusing on equivalence, ESMA's new supervisory powers over EU entities and third country responsibilities. 

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).

The Q&As on MiFID II and MiFIR investor protection and intermediaries’ topics update answers on:

  • Best execution – Disclosure of reports to the public
  • Other issues – Drafting change on understanding the term “ongoing relationship”

The purpose of the MiFID II/MiFIR investor protection Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR.

ESMA will continue to develop this Q&A document on investor protection topics under MiFID II and MiFIR, both adding questions and answers to the topics already covered and introducing new sections for other MiFID II investor protection areas not yet addressed in this Q&A document.

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&As) regarding transparency and market structures issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

The updated Q&A for transparency issues clarifies that for ETFs there is only one average daily turnover (ADT) band from which to choose the highest threshold to be used to calculate the average value of transactions (AVT).

The amended Q&A for market structures issues clarifies how to interpret the application of the tick size regime to periodic auctions.

Background

The purpose of these Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR. They provide responses to questions posed by the general public and market participants in relation to the practical application of level 1 and level 2 provisions relating to transparency and market structures issues.

ESMA will continue to develop these Q&As in the coming months and will review and update them where required.

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&As) regarding the implementation of the Central Securities Depository Regulation (CSDR).

The updated Q&As provide answers to questions regarding practical issues on the implementation of the new CSDR regime.

The latest CSDR Q&A clarifies the scope of the cash penalties regime and more precisely the exemption applicable to insolvent participants. In particular, it specifies that it applies only to settlement fails caused by that participant or to those relating to the liquidation of its position.

Q&As are an important tool to promote common supervisory approaches and practices in the application of CSDR. This document is aimed at national competent authorities under the Regulation to ensure that, in their supervisory activities, their actions are converging along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on CSDR requirements.

Background

The aim of CSDR is to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. ESMA will continue to develop Q&As on the CSDR in the coming months and will review and update them where required.

The European Securities and Markets Authority (ESMA) has issued today an update of its Q&A on practical questions regarding data reporting issues, stemming from the European Markets Infrastructure Regulation (EMIR).

The Q&As clarify:

  • OTC Question 2(h) on when counterparties that start taking positions in OTC derivatives need to notify the relevant NCAs and ESMA;
  • OTC Question 4 on whether counterparties not subject to the clearing obligation should also obtain representation;
  • OTC Question 13 on how a counterparty should determine whether an entity established in a third country would be an FC+/- or NFC+/- if it was established in the Union;
  • TR Question 14 on how the derivatives should be reported in the scenario where a Clearing Member defaults and a CCP temporarily assumes both sides of the outstanding transactions;
  • TR Question 17 on how to populate the fields Trading Venue and Compression for derivatives reported at position level; and
  • TR Question 53 on how to report derivatives based on €STR and other benchmarks that are not explicitly captured by the EMIR ITS.

The purpose of this document is to promote common supervisory approaches and practices in the application of EMIR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of the Regulations. The content of this document is aimed at competent authorities under the Regulation to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on reporting requirements

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