On 1 April 2022, the European Securities and Markets Authority (ESMA) published the second edition of its Data Quality Report which is based on the data that was gathered under the European Markets Infrastructure Regulation (EMIR) and the Securities Financing Transactions Regulation (SFTR) reporting regimes. The purpose of the report is to provide a holistic view of the state of play of both reporting regimes as regards the quality of the reported data and the actions that Member State competent authorities and the ESMA are taking to improve the quality of the data.
The report notes recent developments impacting EMIR and SFTR data quality including three supervisory projects that ESMA carried out which found that trade repositories broadly follow regulatory and supervisory expectations although in some cases there were some shortcomings in the quality of the reports. The report also highlights the positive results of the ESMA’s targeted actions which has led to a significant reduction in reporting errors. Compared to the previous year, misreporting of valuations was reduced by around 50% of the reporting firms subject to the review.
In relation to the SFTR, trade repositories and reporting counterparties implemented the first SFTR XML schema update since the start of reporting in July 2020. The update aimed at removing technical shortcomings that could decrease the quality of the information available to the regulators. The key findings also include:
- Reporting Timeliness – 10% of SFTs are reported late (after T+1).
- Rejected Data – concerns only 2% of all transactions.
- Reconciliation – the reconciliation rate of loan and collateral data has been low but has increased to around 40% and 30%, respectively.