The European Securities and Markets Authority (ESMA) has unveiled its final report on simplifying EU transaction reporting, in a move expected to potentially save up to €1 billion for European markets each year.
The report aims to bring significant cost savings for market participants, and recommends a staged approach to transaction reporting, leveraging both short-term burden reduction and long-term structural reform.
ESMA has also confirmed that a key element of the strategy will include developing a single integrated transaction reporting framework based on a ‘report once’ principle, spanning the Mifir, EMIR and SFTR regimes.
Verena Ross, ESMA chair, said: “Transaction reporting is central to market transparency, risk monitoring and detecting market abuse. However, over time, fragmentation has led to duplication, inconsistent requirements and increased costs for market participants and authorities.
“Our analysis shows that a ‘report once’ approach can significantly reduce costs while improving the quality and usability of data for supervisors. With the implementation of this approach we support more integrated, efficient and resilient EU capital markets”.
Specifically, simplifying transaction reporting in EU markets is aimed at reducing cost and complexity, largely driven by frequent, unsynchronised regulatory changes, reporting duplication across frameworks and channels, as well as dual-sided reporting and reconciliation processes.
Transaction data reported through the proposed single framework will also be available for leverage by authorities and supervisory mandates, to reduce duplication while simultaneously preserving the necessary information for supervision.
The report also estimates that the ‘report once’ strategy could reduce recurring costs by approximately 22-24%, while also bringing in 10-year discounted cumulative net benefits spanning €1.2 billion to €4.9 billion.
Moreover, intermediate measures of the reform will include expanding the use of delegated reporting arrangements, streamlining intragroup exemption procedures and initiating targeted adjustments at ESMA level.
Commenting on the report, Tim Hartley, EMIR reporting director at Kaizen, said: “The direction of travel was expected following the publication of ESMA’s Interim Report in early May, but the final report is still an important marker. ‘Report once’ could reduce duplication and operational burden over time, but it will also place even greater emphasis on data quality and controls across regimes.”
To initiate next steps, ESMA has confirmed that it will engage with EU institutions on the proposed recommendations.