On 4 September 2018, the European Securities and Markets Authority (ESMA) published an opinion (the Opinion) in response to the European Commission’s (the Commission’s) proposed amendments of 24 July 2018 on the technical standards on reporting under the Securities Financing Transactions Regulation (SFTR).
The Commission’s proposed amendments concerned the provisions of the draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) submitted by ESMA that envisaged the mandatory use of forthcoming industry 1 standards (legal entity identifiers for branches and unique trade identifiers for transactions) for reporting to trade repositories once these standards have been “endorsed by ESMA” in the future. The full amendments submitted by the Commission are included in Annex 2 of the Opinion.
In section 4.1.2 of the Opinion, ESMA assesses and justifies the importance of the original text of the technical standards which the Commission has proposed to amend. Following this assessment ESMA has disagreed with the Commission’s proposed amendments to the STFR, and has set out their reasons, namely that the proposed amendments:
- prevent ESMA from fulfilling its mandate under SFTR Article 4(10) by eliminating the possibility to take into account international developments and reporting standards agreed at a global level;
- do not provide certainty, clarity, predictability and consistency;
- deviate from and create inconsistency with current EMIR reporting standards; and
- would result is a significantly extended timeline for the introduction of global standards in the EU, which may result in a reduced timeline for the adaptation by the industry.
ESMA requests the Commission to adopt the RTS and ITS on reporting without the proposed amendments.
