The European Securities and Markets Authority (ESMA) launched two consultations on proposed guidance for some of its supervised entities, including trade repositories under the Securities Financing Transactions Regulation (SFTR).
The Consultation Paper sets out the information ESMA expects to receive and a timeline for supervised entities to provide the required information.
The proposed Guidelines aim to:
- ensure a harmonized approach to periodic reporting;
- increase consistency and usability of the reported information;
- establish proportionate reporting based on the risk profile of the supervised entity; and
- reduce the reporting burden by tailoring reporting frequencies to a risk-based supervisory approach
The Consultation Paper sets out ESMA’s supervisory expectations in relation to good practice in governance arrangements, such as on the role, operation, and effectiveness of the management bodies of the entities supervised by ESMA. The proposed guidance is also aimed at future supervised entities.
From the consultation paper: “To date, ESMA has formalised its periodic reporting requirements for Credit Rating Agencies (CRAs) and Trade Repositories (TRs) in separate ESMA guidelines. In this Consultation Paper and the new proposed guidelines, ESMA is bringing together requirements for CRAs and TRs as well as for the most recent ESMA’s direct supervision mandates over Benchmark Administrators (BMAs), Data Reporting Services Providers (DRSPs) and Securitisation Repositories (SRs).
“The objective of these guidelines is to introduce a common approach to periodic reporting for all these reporting entities (reporting entities). This is achieved through the creation of cross sectoral reporting requirements, which will ensure consistency across these supervisory mandates 1 , synergies in the supervisory assessment of information, as well as scalability to smoothen the expansion to future supervisory mandates. Also, two reporting calendars are defined for all these supervisory mandates, whereby entities will be assigned to one of two calendars depending on their risk profile.”
In one section, ESMA noted that “applicable regulation envisages the conditions under which ESMA shall withdraw the registration of a reporting entity. When the process for withdrawal of a registration is triggered, ESMA will require the reporting entity to present a wind-down plan.”