Europe Looks to Reduce Reporting Burden
Valdis Dombrovskis, the European Commissioner in charge of financial services, said authorities will look at how to safely reduce reporting burdens, particularly for non-financial firms, and developing new technology to standardise data.
In a speech at the Eurofi Financial Forum in Bratislava yesterday, Dombrovskis, who has responsibility for Financial Stability, Financial Services and Capital Markets Union, said the Commission is reviewing whether the quantity of reporting obligations can be safely decreased.
“If we can reduce that burden and achieve the same prudential objectives, we should,” he added. “The Emir review will look at how to safely reduce burdens from the ‘dual reporting’ obligation – particularly for non-financial firms. We are also taking forward a project on data standardisation to improve reporting with new technology.”
The regulatory reporting mandate from the European Market Infrastructure Regulation came into force in February 2014.The Commission is legally required to report on Emir to the European Parliament and the Council with appropriate proposals.
Anthony Arnold, regulatory and operational compliance director at reporting platform Abide Financial, said in a blog that the Emir review is likely to be the next significant EU regulation update. “The legislative review requirement is an important control which enables the EC, European Securities and Markets Authority, relevant authorities and public stakeholders to address any unintended regulatory consequences,” he said.
Arnold cited remarks by Jonathan Hill, the previous Commissioner in charge of financial services, at the last public hearing on the Emir review. Lord Hill said: “It should be possible to lower administrative reporting burdens. And all this while ensuring supervisors have enough information to monitor risks, and intervene if necessary. I want to use the Emir review to do that.”
Dombrovskis, the former prime minister of Latvia, took over the financial services portfolio after Jonathan Hill, Britain’s European Commissioner, stepped down following the country’s vote to leave the European Union. The commissioner tweeted yesterday: “My focus will be to give predictability and continuity to the EU financial sector” and “Strengthening banking sector framework is a key priority. We need to complete EDIS [ European deposit insurance scheme], reduce risk & ensure legislation proportionate.”
Arnold continued that an update from the Futures Industry Association suggests that the Emir review final report will be published in the last quarter of this year and therefore implementation will be in the middle of next year.
“For transaction reporting, this is the first regulatory legislation review process that is progressing towards completion and, yes, we can confirm that both MiFID II and Securities Financing Transactions Regulation also contain similar regulatory self-review provisions,” said Arnold.
MiFID II comes into effect in January 2018 and SFTR, which includes securities lending, is slated for the second half of 2018.
Steven Maijoor, chair of Esma, said in a speech in June that Esma learnt a lot from Emir when reporting was introduced in a “big-bang way” and aims to structure SFTR reporting and data collection so that the industry only needs to make limited updates to their systems to ensure compliance.
“The co-legislators have also clearly indicated their intention to minimise additional operational costs for market participants by building on pre-existing infrastructures, and operational processes and formats which have been introduced with regard to reporting derivative contracts to trade repositories,” said Maijoor. “In that context, Esma, to the extent feasible and relevant, is mandated to minimise overlaps and avoid inconsistencies between the technical standards adopted pursuant to SFTR and those adopted pursuant to Article 9 of Emir.”
In addition Esma is also looking to standardise SFTR reporting requirements with MiFID II.
“To be clear, this doesn’t mean that all the data fields reported under SFTR, Emir and MiFID would be exactly the same, which would put into question why three reporting regimes were envisaged in the first place,” said Maijoor. “But where the same type of information is required, it should be as standardised as possible.”
Maijoor added that trade repositories process more than 350 million submissions each week under Emir and Esma expects that under SFTR they will be better prepared right from the start.
More on trade reporting:
US options market Nasdaq MRX will migrate to the cloud this year.
Institutional investors are increasingly considering opportunities in the digital asset class.
The consolidated quote system for corporate bonds has raised funds to expand outside the US.
SEC's proposed rule could result in dissemination of incomplete, inaccurate and misleading data.
SEC requires a review of data on non-listed securities before initiating or resuming quotes.