The European Securities and Markets Authority (ESMA) is looking to simplify current reporting regimes under the Market in Financial Instruments Regulation (MiFIR), with the regulator launching a consultation paper on Thursday.
In particular, the consultation paper reviews the reference data and transaction reporting obligations under MiFIR, proposing possible amendments to the regulation, which has been in place since January of 2018.
ESMA Proposes a Revision to Reporting Obligations
In particular, the consultation paper proposes a possible revision of the ToTV (Traded on a trading venue) concept, the scope of indices subject to the reporting obligation, the further alignment between EMIR and MiFIR reporting regimes.
Additionally, the consultation paper published on Thursday has proposals to remove, replace and further clarify specific data elements that should be reported under the transaction reporting obligation, ESMA said in its statement.
“ESMA’s objectives for this review are to simplify the current reporting regimes and enhance the quality of the data reported by ensuring consistency among various reporting and transparency requirements,” the regulator said.
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The proposed changes from the pan-European regulator are especially relevant for trading venues, systematic internalisers, investment firms, data reporting service providers and asset management companies.
Speaking to Finance Magnates, Quinn Perrott, the co-CEO of TRAction Fintech, said: “The current TOTV is very confusing as a product becomes reportable not based on its characteristics but because of a decision by a trading venue, of which there is an ever-increasing number. It could lead to more OTC FX contracts being reportable, especially those traded by Systematic Internalisers.
“Currently a whole index is reportable if just one constituent is TOTV. This can be quite excessive for large regional indices (ASX200 for instance) that may contain one dual traded stock. This paper seems to want to expand the scope to all indices where the underlying is a benchmark.”
ESMA Consultation Paper Dashes Hopes
With the consultation paper now launched, ESMA has invited all market participants in the European Union to respond by 20th November 2020. The authority plans to submit its final review report to the European Commission in the first quarter of 2021.
“Any move to further align EMIR and MiFIR is welcome, unfortunately, the hope their needs can be fulfilled in a single report has been dashed by this paper,” Perrott added.
Furthermore, he brought into question the timing of the consultation paper. “The timing of these proposed changes is unusual as it may result in a fairly immediate fork in the road between MiFIR and UK MiFiR (post-Brexit with no equivalence).”