RegTech Intelligence

EU’s ESMA sets out ambitious five-year data plan to reduce compliance burden

Rachel Wolcott, Regulatory Intelligence

The European Securities and Markets Authority (ESMA) set out its five-year data strategy aimed at reducing financial services firms’ compliance burden and establishing itself as an enhanced data hub.

“We want to contribute to reducing the compliance burden for companies and facilitate data reporting by means of increased standardisation and the use of modern IT solutions across the reporting process and the entire data lifecycle,” said Verena Ross, ESMA’s chairperson, in a statement.

ESMA’s goal is to provide easier access to financial data, through enhanced data sharing with authorities across the European Union and at the national level. Initiatives such as the European Single Access Point (ESAP) will provide access to financial data to the wider market, including retail investors, Ross said.

The European Commission first consulted on ESAP in 2021, as part of its work on the Capital Markets Union. The idea is to provide financial and non-financial information publicly disclosed by companies to boost transparency and improve visibility into small- and medium-sized companies, helping them to attract investment.

ESMA’s data strategy could see ESAP’s scope expanded as it seeks to make more market information publicly available.

ESMA as an enhanced data hub

ESMA intends to scale up its data capabilities to deliver six strategic objectives for data in the next five years. That includes the establishment of an enhanced data hub at ESMA.

It will become an EU securities markets data hub, focusing on improved data and information accessibility, interoperability, usability, and achieving synergies and economies of scale. ESMA continues to develop its data platform to enable advanced analytics and provide high-quality master data to national authorities.

Another objective will be to offer public access to some data in an easily accessible and usable way using machine readable formats and via user-friendly search and analytical interfaces. Access could be provided through ESAP using interactive dashboards. It would gradually extend the number of datasets available.

Data-driven supervision

It intends to promote data-driven supervision by joint developments and use of novel technologies. It will increase data collaboration through better data standardisation, quality, and reusability.

It aims to produce efficient data policy output to reduce the compliance burden for reporting entities by reducing duplicative and inconsistent requirements, optimising reporting flows, and promoting effective and efficient data sharing.

It will facilitate systematic data use by establishing processes, methodologies, and tools enabling systematic use of data for evidence- based policy development, supervision, and risk assessment.

Further standardisation work

ESMA will continue work to drive data standards to underpin its data strategy, particularly as interoperability and the reduction of compliance burden are key objectives.

Fabrizio Planta, ESMA’s head of markets and data reporting pointed to gains regulators have already made on standardisation, particularly in the use of legal entity identifiers (LEI), unique product identifiers, and unique transaction identifiers.

“You will certainly have noticed the consistency that we managed to achieve on those standards; all based on XML, all developed with the ISO and basically being very close. If you look at the [U.S.] CFTC requirements and our requirements, those are certainly very close. For entities operating on a cross-border basis or on a global basis is certainly very important,” Planta told a press conference launching the data strategy.

Use of LEIs has been particularly successful, Planta said. It is now a standard for different data sets. LEIs were not welcomed initially, but the “no LEI, no trade” initiative around Markets in Financial Instruments Directive (MiFID II) transaction reporting implementation drove acceptance.

“[Firms] are starting to see the benefits for using it also for internal purposes,” Planta said.

Produced by Thomson Reuters Accelus Regulatory Intelligence on 16 June 2023

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