The European Association of CCP Clearing Houses (EACH) has responded to the European Securities and Markets Authority's (ESMA) consultation on draft guidelines on reporting under the European Market Infrastructure Regulation (EMIR).
ESMA’s consultation paper included draft guidelines on a wide range of topics related to reporting, data quality and data access under EMIR Refit.
The paper focused on: how reports should be constructed and in what circumstances reports should be made, reporting logic, reporting in the case of delegation as well as under provisions on allocation of responsibility for reporting, the population of specific sections of fields, and the correct population of fields for different reporting scenarios and different products.
EACH welcomes increased guidance and suggests ESMA should work collaboratively with the industry to provide more extensive guidance and worked examples of reporting.
In particular, EACH believes guidance is needed for valuation reporting considering the importance of monitoring systemic risk in the financial system.
ESMA expects counterparties to report the value of the contract provided by the CCPs, but in order to harmonise the central counterparties (CCP) valuation reporting and for regulators to achieve risk oversight, more extensive guidance and worked examples are needed, explains EACH.
Additionally, the association highlights that ESMA should consider the differences between exchange traded derivatives (ETD) and over the counter reporting.
“We believe that ETD risk sits at the position level, and it is in regulators’ interest to focus on ETD position level reporting rather than transaction level reporting to effectively monitor systemic risk,” says EACH.
According to EACH, it is also important for ESMA to consider proportionality, and notes that reporting zero contract value on a daily basis when a position is netted to zero adds no value to regulators only adds additional operational burden on reporting counterparties.
“We believe a strong dialogue between regulators and market participants is essential to improve the reporting consistency under EMIR.”
The association comments: “EACH members welcome collaborations between ESMA and CCPs, and look forward to further engaging with ESMA and other regulators to build a robust and efficient reporting regime.”
