In the latest review by the European Securities and Markets Authority (ESMA) of data quality under the European Market Infrastructure Regulation (EMIR), ESMA said that substantial work had been carried out and “this has yielded observable results and has set the path to continue strengthening this regime and increasing the quality of data.”
Data quality is recognized as – and will remain – a key area of attention for supervision to ensure sound, timely and effective supervision of the financial markets, the regulator added. This is important not only in order to maintain constant attention to the quality and use of data reported, but also with the development of new reporting regimes (e.g. Sustainable Finance Disclosure Regulation) and with the upcoming EMIR Refit at the end of April 2024.
National Competent Authorities (NCAs) and ESMA should continue working on enhancing EMIR data quality and on using the appropriate tools – including enforcement when needed – to drive up standards and ensure that CPs submit information in an accurate, complete, consistent and timely manner. Paying close attention to this topic remains fundamental in building a data-driven supervisory approach, a key strategic objective under the ESMA Strategy
Most importantly, ESMA stresses that ensuring data quality remains a primary duty of supervised entities. Firms, and in particular their top management, are expected to take ownership of the data they report and increase its use also for internal purposes, as the more data is used, the more it can improve.
ESMA wrote that the joint engagement by ESMA and NCAs on the improvement of the quality of transaction data, as well as the input of stakeholders (notably the European Central Bank and European Systemic Risk Board), have brought tangible and observable benefits for all data users, which in turn have enriched the data quality process with their own findings and observations.
“Today, authorities have better tools and better data to monitor the orderly functioning of markets and the evolution of the systemic risks to financial stability. Thus, the implementation of further targeted efforts must continue to be pursued and further enhancements across datasets should continue taking place to ensure the consistency, quality and reusability of data made available to ESMA and NCAs,” ESMA wrote.
In an interview with Finadium earlier this year, Thomas Steimann, head of Regis-TR, said that as EMIR Refit comes into force on April 29, one of the major concerns is that regulators are expecting full compliance from day one, and do not seem to be amenable to an unofficial “grace period” in accounting for teething problems. He warned that if regulators perceive that data quality improvement is not happening in a timely way, market participants may face punitive actions such as fines.