FESE response to the ESMA call for evidence on a comprehensive approach for the simplification of financial transaction reporting

FESE responded to ESMA’s call for evidence on a comprehensive approach for the simplification of financial transaction reporting (here), highlighting the major challenges of the current system and outlining what an ideal solution should include.

FESE appreciates the combination of reporting regimes and the removal of duplicative reporting. An effective approach to simplification should involve:

• Splitting ETD and OTC transaction reporting along clear lines: ETD transactions are only reported once by investment firms and/or trading venues according to existing practices under MiFIR, and OTC transactions are reported under EMIR by clearing houses.
• Dropping ETD reporting from EMIR (i.e. ETD post-trade events, position, valuation and collateral reporting).
• Combining the MiFIR and EMIR transaction reporting templates as they both cover derivatives.
• At a later stage, thetemplate could be extended to other reporting frameworks, such as REMIT and MAR, provided it follows a clearly defined structure. SFTR does not fit into a common reporting template due to the distinct structural characteristics and different purposes/requirements in the design of SFTs and derivatives.
• Ideally, trading venues’ reporting of non-MiFIR end clients’ sensitive information should also be dropped, as the requested data is too personal (i.e., name, surname and date of birth).
• Additionally, while acknowledging the importance of preserving the information scope, FESE calls for ESMA to conduct a comprehensive review of the currently required data points and reconsider which ones are needed in practice.

Towards a more streamlined reporting, FESE supports the creation of a centralised hub for transaction data, under ESMA’s technical oversight:

• Only ESMA and NCAs could access it, in accordance with their supervisory duties. This hub should follow the existing statutory principles of confidentiality as well as strictly adhere to the “need-to-know” principle to protect sensitive information.
• While direct reporting of transaction data to this centralised ESMA hub could improve efficiency ad minimise overlap, it should be acknowledged that this is a long-term project requiring careful design and consideration.
• There can be no one-size-fits-all approach, as market participants differ significantly in how they organise their reporting.