Steven Maijoor, Chair of ESMA, gave the keynote speech at the event organised by the CFA Institute in Brussels, Belgium.
"Let me give you a glance of the challenges and opportunities these new regulatory datasets will entail:
In the EU, the implementation of EMIR and AIFMD respectively will significantly increase the availability of harmonised data regarding OTC derivatives and alternative funds, including some crucial information from a financial stability perspective such as funds’ use of synthetic leverage. Such information will help to identify potential “super spreaders” of financial contagion, namely being the most interconnected market participants.
In June 2014, ESMA already published a working paper that showed that the EU CDS market was highly concentrated, with the vast majority of market participants being exposed only to a few others. The ESMA paper underlined the systemic role of some large banks, but it also pointed to the importance of some non-bank participants.
Probably the biggest contribution to improved data availability will come from the implementation of MIFID II. It will broaden the range of instruments for which market participants will be required to store or report data, which in turn will extend the data set available to competent authorities, including identifiers which will enable regulators to detect the trader executing a specific transaction, the algorithm used, and the client on whose behalf the transaction is conducted. This will lead to significant changes both in the way firms report to competent authorities and in the way supervisors monitor market participants.
While I am fully aware that all these new data requirements come at a cost, to both market participants and regulators, I am convinced that these data are inevitable for identifying and responding to stability risks in securities markets. We cannot do our work while being in the dark about what is happening in financial markets. Compared to our colleagues in banking and insurance supervision, we are only about catching up from a situation where we had the least intelligence on our parts of the financial system. As more and more data are becoming available, it is our responsibility as regulators to work together with market participants to improve the quality of these data and that we properly use it in our supervisory activities.”
Full speech
© ESMA
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