The European regulatory community has been talking a good game over the last eight months about its focus on reducing regulatory burdens to allow the region to be more globally competitive, but how much actual burden has been lifted rather than shifted?

One area of frequent contention since its introduction has been the European requirement for both parties to trade and transaction report. Last week, European member of parliament Markus Ferber once again reiterated his call for European regulators to move from dual-reporting to single-sided as part of his role as the appointed rapporteur for the Market Integration and Supervision Package (MISP).

The industry has long bemoaned the operational headache of dual-sided reporting, but up until this point, the European Securities and Markets Authority (ESMA) has kept the practice a part of its Markets in Financial Instruments Regulation (Mifir) and European Market Infrastructure Regulation (EMIR) requirements, in spite of the constant negative industry feedback. Ferber believes that it should be rescinded in favour of a single-sided regime that is more in-keeping with the US and other jurisdictions.

MISP sits as part of the wider Savings and Investments Union plan, which is Europe’s framework to attract more capital and investment into the region’s markets. Duplicative and redundant regulatory requirements are being scrutinised by European legislators such as Ferber to cut the red tape and reduce costs for firms operating in the region.

European regulators have long championed dual-sided reporting because, they argue, it allows them better visibility into the markets, though it has also been challenging from a data reconciliation standpoint amongst regulators. If Europe is to compete with markets such as the US, which is pursuing an active deregulation agenda, then it needs to take into account the costs of compliance as part of the wider package. European regulators have repeatedly stated that deregulation is not on the cards, but simplification can and should be pursued.

However, Ferber’s proposal isn’t simply to adopt a like-for-like regime from the US market and instead it focuses on expanded mandatory delegated reporting for regimes such as EMIR. This would push the regulatory burden onto one party rather than the other, potentially including the reconciliation costs for checks between both counterparts’ trade data. Not all industry feedback on this suggestion has therefore been entirely positive, but it is seen as a better alternative to dual-sided reporting.

There would have to be much more market practice clarity for firms to know which party would be responsible for reporting under this new regime, before it could be properly implemented. So, this isn’t the end of the road if ESMA decides to follow Ferber’s recommendations. Moreover, any changes to data reporting requirements from moving from dual-sided to single-sided reporting would also have to be consulted upon by ESMA, which means changes aren’t going to be immediate anyway.

It will be interesting to see whether an MEP’s recommendations are enough to get things moving in the interim. At the very least, it will hopefully mean another opportunity for industry consultation and input on the topic (if firms aren’t sick of that already after so many years of it!).