17 October 2019

ESMA sees significant room for improvement in national regulators’ supervision of derivatives data

ESMA published the results of a peer review it conducted into supervisory actions of six National Competent Authorities (NCAs) regarding their approaches at enhancing the quality of derivative data reported under the European Market Infrastructure Regulation (EMIR).

This peer review complements ESMA’s Data Quality Action Plan (DQAP) in order to further improve the quality and usability of derivatives data.       

The review was targeted at those six NCAs who supervise important derivative markets in the European Union (EU) and have key counterparties reporting their derivative trades to EU Trade Repositories, namely:

the Netherlands Authority for the Financial Markets (AFM);

the French Authority of the Financial Market (AMF);

the German Federal Financial Supervisory Authority (BaFin);

the Central Bank of Ireland (CBoI);

the Cypriot Securities and Exchange Commission (CySEC); and

the UK Financial Conduct Authority (FCA).

In addition, ESMA was reviewed in its role as direct supervisor of Trade Repositories (TRs).

The peer review assessed how the six Authorities supervised data quality under EMIR in the following areas:

NCAs’ supervisory approach to EMIR data quality;

Integration of EMIR data within the NCA’s overall supervisory approach; and

NCAs’ access, assessment and analysis of EMIR data quality.

The review delivered mixed results for the six NCAs. The majority of NCAs had a supervisory approach to EMIR data quality in place. However, two NCAs lagged behind when it comes to integrating EMIR data quality controls into their overall supervisory approach, which negatively impacted the NCAs’ ability to access, assess and analyse EMIR data.

ESMA identifies good practices and sets out plans to improve supervision of data quality    

The review also identified good supervisory practices by the six Authorities. These good practices should be considered by all NCAs and, where appropriate, incorporated into existing

supervisory approaches. ESMA has also put forward several initiatives to improve the supervision of EMIR’s data quality in the short and long-term. The short-term initiatives include: revising NCAs’ annual Data Quality Review exercises and identifying how NCAs can regularly use the data as part of their overall supervisory approach.

Full peer review

© ESMA