In April, the European Securities and Markets Authority (ESMA) published its 2024 Report on Quality and Use of Data (5th edition). The Report covers data disclosed under various regulations within ESMA's remit, including European Market Infrastructure Regulation (EMIR), Securities Financing Transactions Regulation (SFTR), Markets in Financial Instruments Regulation (MiFIR).
The addition of ESEF and short-selling data to the 2024 report showcases the increased data usage by authorities to support key objectives such as financial stability, orderly markets and market integrity.
Related: DTCC’s GTR to Add MiFID/R Reporting Capabilities
Key findings and areas of focus from the Report:
- EMIR REFIT impact on data quality: The highlights improvements in rejection rates and the upgrading of legacy derivatives, with only 2% of the trade base not upgraded to new standards as of February 2025.
- EMIR Data Quality Indicator Performance: Rates of incorrect Entity Responsible for Reporting (ERR) have reduced and remain under threshold, however other Data Quality Indicators remain too high over the 5% threshold, with most between 10 and 20%.
- Enhanced focus on SFTR data quality: The Report specifically addresses the need for increased quality in SFTR data, acknowledging that there are still "large margins of improvement" to be made.
- Data Quality Indicators (DQIs) for SFTR: ESMA finalized its DQI approach for SFTR, following its successful introduction for EMIR, which will clearly be a larger focus area in future.
- SFTR Data Quality Indicator Performance: Similarly to EMIR, rates of incorrect ERR remain under threshold, but others remain too high over threshold even with substantial improvement from prior years, with those compared between 10 and 35%.
- Enhanced cooperation with BaFin: ESMA and BaFin are collaborating on a "periodic engagement" to improve data quality.
- Improved data quality through engagement frameworks: The Report highlights instances where engagement frameworks have led to measurable improvements in data quality.
- Transparency and supporting external users: The Report provides a new annex with methodologies for calculating data quality indicators and code for web-scraping data from regulatory authorities, aiming to increase transparency and support external users.
- Increased use of transaction data by regulatory authorities: The Report emphasizes the increased use of transaction data by regulatory authorities for market monitoring, supervision, enforcement, and policymaking.
- Data governance frameworks: The Report underscores the importance of solid data governance frameworks to improve data quality, including data accuracy, completeness, and relevance.
- Data Quality Benchmarking: The Report also mentions the importance of data quality benchmarking for measuring and improving data quality.
Related: Navigating the UK EMIR Refit: A Strategic Imperative for Financial Firms
When reviewing the findings, it’s important to remember that Data Quality is now a concern for all firms who have a reporting obligation. Historically buyside firms who delegate their reporting were only responsible for ensuring that their trades were submitted on a timely basis to a TR. However, with the recent implementation of EMIR Refit this has now changed, and delegating firms are themselves responsible for the integrity and quality of the data being submitted.
Trade Reporting Analytics: How We Can Help
Knowing that ESMA – and other regulators - are now scrutinizing data quality more closely than ever before, the ability to access, evaluate and respond to comprehensive and detailed insights on reporting behavior is critical.
In response to significant demand for analytical tools from its global client base, DTCC launched its Trade Reporting Analytics service a little over a year ago with the objective of providing clients of the Global Trade Repository (GTR) with greater transparency into data quality across the entirety of their derivatives trade reporting submissions. Take-up has been particularly strong in Europe, and particularly among buyside firms, aligning to the increased focus on data quality from both the industry and regulators.
With no integration required, clients can access comprehensive insights in near-real time across their globally reported data, helping them to identify and understand specific challenges with their reporting as well as to benchmark their reporting performance versus their peers. These insights include areas such as EMIR Errors & Omissions dashboard, and other key Data Quality Indicators as referenced in the report.
With global regulatory rewrites continuing apace – UK/EMIR Refit transition just ended, JFSA Phase 3 is coming up soon, and both HKMA and Canada fall later in the year – DTCC’s product team is continuously planning ahead and seeking to understand how to enhance the service to maximize the user experience and value for our clients. With the output of the 2024 report on SFTR data quality challenges, expanding our insights into SFTR reporting will be a high priority for our roadmap this year.