The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, yesterday published the third edition of its Data Quality Report under the European Markets Infrastructure Regulation (EMIR) and the Securitised Financing Transactions Regulation (SFTR) reporting regimes.
The report highlights the increased use of transaction data by EU financial regulatory authorities in their day-to-day supervision and identifies significant quality improvements following a new approach to data monitoring. In addition, it sets out how ESMA, together with the National Competent Authorities (NCAs), the European Central Bank (ECB) and the European Systemic Risk Board (ESRB), has incorporated key insights from its data monitoring in several internal workstreams.
The new framework, adopted in 2022, takes a more data-driven and outcome-focused approach to data monitoring and to collaborating with the NCAs on data quality issues under EMIR and SFTR.
Specifically, it consists of two new elements:
a centralised data quality dashboard with EU-wide indicators covering the most fundamental data quality aspects under EMIR;
a data sharing framework that enables relevant authorities to follow up with counterparties when potentially significant data quality issues are detected
New this year is the analysis of MiFiR transaction data from Authorized Reporting Mechanisms (ARMs) and Approved Publication Arrangements (APAs), following on from ESMA’s new supervisory powers over Data Reporting Services Providers (DRSPs).
The methodology underlying the new approach is based on ESMA’s long-standing experience as supervisor of Trade Repositories (TRs) under EMIR and SFTR.
Next steps
ESMA and the NCAs will continue to work on extending the new monitoring framework beyond EMIR and SFTR in 2023.
Continued collaboration with NCAs and stakeholders such as Repositories, DRSPs and reporting entities is crucial to achieving further improvements to data quality under the relevant reporting regimes.
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The revalidation process carried out by ESMA is a crucial step in maintaining the accuracy and reliability of the SFTR data provided by Trade Repositories (TRs). This process involves evaluating the compliance of TRs with the validation requirements set by ESMA. To achieve this, ESMA has developed tools that enable the analysis of Trade Activity Reports.
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The full report is available at https://www.esma.europa.eu/sites/default/files/2023-04/ESMA74-427-719_2022_Report_on_Quality_and_Use_of_Transaction_Data.pdf